Property Buying Tips
Buying a property is perhaps the single biggest investment made by a person during his lifetime. In Pakistan you must exercise due caution in buying a house, plot, commercial office, agricultural land etc. lest your precious savings goes down the drain. After finalizing the desired property, you still would have to wade through a formidable maze of tedious legalities and endless paperwork. However, with proper planning and research, the process of purchasing a property could become quite smooth and stress-free. In order to keep yourself safe from potential fraud, you should familiarize yourself with various legal jargon and other documents commonly used in property transactions in Pakistan, as listed below:
Sale Deed/Agreement or Title Document:
Sale Deed (also called Sale Agreement or ‘Registry’ in Pakistan) contains important details about the property transaction such as names of parties, area, number or identification of the property, sale price, payment details, possession, etc. This is a very important document and therefore must be very carefully drafted and prepared. Especially property buyers should seek professional legal help to prepare sale deed and execute it.
In many cases a title document (called title deed, or allotment letter) is also used to declare ownership of a certain property. New residential and commercial developments like housing societies, commercial towers, residential compounds use such title documents for example Defense Housing Authority (DHA), Bahria Town, Lake City etc.
A ‘Registry’, sale deed, title document or allotment letter is extremely important as this is the only document that declares that the property really belongs to you. If you wish to avail some loan against your property, the original title document has to be produced. If you sell your property, you must retain a copy of it. Every original paper related to the original title has to be given away to the new owner. But, you should always keep copies for your record.
However, if you intend to sell a part of your property, do not handover the original title documents. Here, as you bought the whole property but selling it in parts, you should retain the original title documents. In such a case, only true and certified photocopies of the original papers are to be handed over to the purchasers.
Stamp duty is imposed by the provincial government on all property-related transactions and, therefore, it varies from one province to another. It is usually a percentage of the transaction value of the property on every registered sale. In Pakistan stamp duty is commonly paid by the buyer. The amount of stamp duty will be decided on the basis of the value shown in the sale deed. Stamp duty is to be paid during the registration of the property transaction.
Registration is the process of official recording of the property transaction, which is done by the office of sub-registrar. A finalized sale deed should be duly stamped and registered at the appropriate local office of the sub-registrar. Both the seller and purchaser need to be present at the sub-registrar office for registration of the sale deed. However, in case of Pakistanis living overseas, the purpose can be achieved through a duly authorized attorney.
For agricultural land transactions, a document called ‘Fard’ has to be prepared that would have all the necessary details like ownership, land quality, mortgage details (if any), present cultivator of the land, etc. A buyer of agricultural land must demand the most recent copy of the Fard from the owner. Once the transaction is complete and the sale deed is prepared in buyer’s name, the local ‘Patwari’ (a revenue official) will provide a new ‘Fard’ on submitting application to him. The buyer must ensure that the new ‘Fard’ document mentions his name as the new owner and cultivator of the land.
Tips for Property Buyers:
- Always check historical ownership record of the property. Never skip or underestimate this step, because a previous defect in property ownership will always remain there and possibly expose you to contesting claims on the property. A property may not be on the name of the owner from whom you are purchasing or there might be disputes pending on the property. A competent lawyer is the best person to inspect and investigate property ownership record before you finalize the deal. This will ideally be done either by physical inspection of the property, confirmations from the neighbors, and of course by checking and obtaining certified records from relevant office where property transactions are registered, for example office of the sub-registrar. Such inspection of the record will also highlight any mortgage claim on the property.
- You should always ensure that the seller has the title and possession of the property as well as the right to transfer the property. If the property is a constructed house or building, check if the building adheres to relevant municipal/planning authority requirements. Ensure that there are no tenants and get a declaration that the property was purchased from the seller’s funds and is not mortgaged. Check whether all dues such as property tax, society, water and electricity bills, etc. have been paid in full. Make sure to take possession of all relevant documents and the original title document (for example allotment letter, completion certificate, occupation certificate and all other documents, etc.).
- There are many cases where the seller mortgaged the property but did not inform the buyer about it. In order to avoid any fraud, you must ask the original copy of the title document (‘Registry’, allotment letter etc.). The owner will not have it if the property is mortgaged.
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