Essential consumer document checklist for buying property in Pakistan
By Huma Shah
Despite a recession in the country the real estate business in Pakistan is still going steady. More and more people are buying property not only as an investment, but also for their personal use. There are many development projects and housing schemes which have been developed in the last ten years. Unfortunately, along with the genuine schemes, a lot of land frauds have been perpetrated, causing loss of people’s entire life-savings and the dream of buying or building their own homes.
At such a time it is important for the new buyer to ensure that he is able to invest his money in real estate which is genuine and to keep in mind the following steps in order to eliminate any contingencies regarding the clear title of the land, the possession of the land, whether it is encumbered by any mortgage/ charge and whether the land is freehold or leasehold. Ownership to the buyer is transferred through a document of title and it is essential that the buyer establish in what manner the ownership of the property has passed to the present owner/the seller with respect to the property being sold. These include (i) a Sale Deed; or (ii) the Allotment letter, in case the property forms part of a Housing Society/Authority; or (iii) Exemption Letter/Adjustment Letter, in case the property is controlled by a development authority, e.g. LDA; or (iv) a Gift deed (Hiba nama) in case the property has passed down to the seller by way of gift; or (v) a PTD or extract of RL-II, in case the property is an evacuee property.
In the case of document(s) of title concerning Agricultural land, then the following, amongst other, latest documents are required to be reviewed by the buyer: (i) the Sale deed or the Gift deed; (ii) the Mutation (Intiqal) which may be based on a Sale deed, Exchange or Inheritance (Intiqal virasat) and/or Gift deed of the property; (iii) the latest Jama bandi (Extract from the Record-of- Rights); (iv) the latest Khasra Girdawari; (iii) the latest Fard-Malqiyat (iv) the Non-Encumbrance Certificate and (v) the Aks Shajrah.
Documents to be obtained in respect of Urban Property include (i) Sale Deed or Transfer Letter (including any registered deed as referred to paragraph 3 hereinabove in which interest in the property has been transferred); (ii) an approved/certified Site Plan of the property; (iii) the receipts of payment for the last 3 years of Property Tax on the property; and a No-objection Certificate/Non-Encumbrance Certificate from the relevant authority where the record of the property is being maintained.
Original title documents issued in favor of the seller, including those of any previous sales (known as the chain of title documents) must be obtained from the seller (as well as any power of attorney). Prior to purchasing property/land, a thorough investigation into the title of the seller in the property should be carried out by an inspection of the property’s files being maintained with the relevant authorities in order to confirm that the seller is the actual owner of the property being purchased. Such search is carried out from the authority which maintains the land record of the area where the property is situated. It is usually recommended that the title of the land be inspected at least as far back as 25 years and/or a minimum of 3 transactions prior to that of the present owner/seller. In case the property is under joint ownership it should be confirmed that all shareholders comply with the sale.
The buyer must also make sure that all property taxes, payments of utilities have been paid by the seller; there is no encumbrance/charge on the property by any banking/financial institution. It is usual to execute an agreement to sell prior to execution of the final sale deed/agreement. An agreement to sell usually includes the details of the property being sold, the amount of ‘token’/earnest money (the ‘biyana’) token money being given by the buyer to the seller, and the remaining amount of money to be paid and the date by which such money is to be paid to the seller. Although the agreement to sell does not transfer title of the property from the seller to the buyer, it does, however, create a right in favor of the buyer to seek the specific performance of the agreement from court in case the seller refuses to honor the terms and conditions of the agreement. Conversely, it also provides the seller with the right to retain the token money and refuse to execute the final sale deed/agreement in case the buyer does not comply with the stipulations set out in the agreement to sell. In the event the property is being sold /transferred to the buyer by a power of attorney holder of the owner/seller of the property then it is important that it is ensured that the power of attorney is affixed with appropriate stamp duty, has been duly registered with the relevant sub-registrar. In the event it deals specifically with the Property being sold then the original deed of the said power of attorney should also be provided to the buyer. The holder of a forged power of attorney does not have the authority to transfer the legal title of a property. Full and final title in the property is only deemed to have been transferred once the sale deed/title document has been duly executed. A sale deed must be affixed with requisite stamp duty and compulsorily registered with the relevant sub-registrar. Once the sale has been completed the factum of the said sale is required to be entered into the record of the property being maintained with the relevant authority.
Huma Shah is a corporate lawyer, partner and consultant for the law firm Sheikh, Shah, Rana and Ijaz. She can be reached at email@example.com
This article was originally published in the print edition of Valuemag, issue 2, June 2008.