Selling & Transferring of Property
Selling or Transferring of Property (add disclaimer: This is a guide only and arraj.pk does not bear any responsibility / liability whatsoever). If you are a real estate market entrant, you may be wondering how to sell property in Pakistan. The task, as has long been the complaint of many a property affiliate in the country, can seem like a difficult one. Now the good news is that you no longer need to worry about this problem. This blog, which will likely have you coming back for quick check-ups every now & then, details everything you need to know to transfer property in Pakistan.
So how exactly do you go about
transferring and selling property in Pakistan?
Well, you start off by knowing what exactly a
transfer of property is.
As is ‘what the process entails’.
What does the transfer of
property even mean?
Legally speaking, someone owns a property when he (or she) has a
‘title’ to it. In Pakistan, a transfer of property basically comprises the transfer of the title of
a property from one person to
another.
This transfer can take place in
a number of ways, and doesn’t merely imply a sale. It can also include the
concerns of mortgage, gift, lease, and exchange.
Similarly, there can be
different kinds of properties. But, real estate usually only deals with
immovable properties. Though ‘plot files,’ as the system exists could be
considered a kind of movable property.
What is an immovable property?
Immovable properties, as the
name suggests, property that cannot be moved without alteration. It is usually
something that affixed to earth. Moving it can drastically alter it. This can
include plots, houses, apartments, shops and similar buildings or structures.
Houses, plots, apartments, all
count as immovable properties.
Who can transfer property in
Pakistan?
Anyone who is competent to contract
Only someone who can sign a
contract can, legally, transfer property. Under Contract Act 1872, a contract
is a binding agreement between two parties.
The following cannot not be a
party to a contract:
In Pakistan, currently, this
means someone under the age of 18.
Someone who is unable to
understand the consequences of his action. This may be due to a permanent or
temporary mental disability or other similar reasons.
Sometimes, you can be legally
barred from signing any contract.
Therefore, it follows that only
someone above the age of 18, is mentally sound, and not legally barred from
signing a contract can transfer property in Pakistan.
Majority and lucidity are
requisites of a contract.
The procedure for transfer of property
in Pakistan
1. Token and Bayana
This is usually the first step
in the transfer of property. The potential buyer pays a ‘token’ amount to
seller. The buyers pays to prove his willingness. Detailed discussion,
negotiation, and practical steps to buying property follow this.
Resultantly, the seller
temporarily stops negotiating the sale of property with other potential buyers.
If the sale falls through, the token gets returned, with appropriate deductions.
The token is usually followed
by ‘bayana’. It serves the same purpose as the token. However, unlike the
token, it makes the things slightly more official. It is usually coupled with a
written agreement.
Below you can find the details
of property sale agreement format in Pakistan. This goes with bayana:
The complete details of the
property, the terms of the sale property, the total amount of money in
consideration of which the seller is transferring, the date on which the buyer
is going to pay the whole amount of money (after bayana and token).
2. Required property documents in Pakistan
You will need to get your
documentation in order. Here’s a list of property documents you will need:
Copies of National Identity
Cards (NIC) of the parties.
Original title deed of the
seller. The title deed is the document that proves the ownership of the seller.
Sale deed. This is the
agreement (contract) signed between the buyer and the seller. This, obviously,
is the most important property document in Pakistan.
The other property documents in
Pakistan may differ depending on the location of property.
Fard-e-Malkiat
(Record of Rights): It is also simply known as farad. Seller can get it from
property registration office. It is a guarantee from the registration office
that the property belongs to the seller.
Non-demand
Certificate (NDC): This document shows that you don’t owe any dues for the
property. Depending on the location of your property, you can get it from your
local development authority. Or the residential projects such as DHA or Bahria
Town.
In case housing societies, you
usually also need a letter from society for transfer. This is basically a
replacement of farad for private housing schemes. You need it before you can
execute the sale deed.
Societies
generally make the matters a lot easier for the sellers and buyers. They have a
detailed system in place at the society offices to facilitate the transfers.
Recently,
the news that internal transfer in housing schemes will stop made headlines.
Board of Revenue (BOR) transfer
will replace internal transfers, according to the reports.
But no
concrete steps have followed it. According to the real estate experts
interviewed, the matter is under consideration.
Sources
explained that the primary concern of the government is taxes. They also wish
to stop operation of illegal housing schemes. Their concern is not transfers
through BOR.
In any
case, the housing schemes have to keep a record of transfers. So any
implementation will have to involve the society administration in any case.
3. Acquisition of stamp paper and payment of taxes
Finally, you need stamp paper
on which you will write the sales deed – the contract for sale. The value of stamp
paper will differ depending on the value of the property. At the time you
will have to pay the requisite the taxes as well. These are generally paid by
the buyers.
Generally, the taxes you have
to pay for this will include the following. These are the percentage of the
value of property:
· 3% Stamp Duty
· 2% Capital Value Tax
· 1% District Council Fee
· Fixed registration, usually PKR 500.
4. Writing the sale deed
It is generally recommended to
hire a deed writer or a lawyer to write the sale deed. They have experience and
they know the things that are absolutely included in any deed. This can
generally help avoid any future complications between the parties.
However, it is not compulsory.
You can as easily pen down the deed yourself. Property sale agreement formats
for Pakistan are conveniently available online. You can find them on the Punjab
Land Record Authority’s Registration of Deeds portal. And you can find them
below as well:
· Sample sale deed format
(general)
· Sample property sale
agreement format in Pakistan. (This can also serve as sample of property sale agreement for
plots)
5. Execution of Sale deed
Finally, you will take the sale
deed written on the stamp paper, and the requisite documents noted above, to
the sub-registrar’s office. A magistrate/sub-registrar hears both the parties.
Then confirms that the sales deed and the transfer is complete and registers
the deed.
The property stands transferred.
The transfer is completed when
the sale deed is registered with sub-registrar.
Some Helpful Tips
The guide above takes you
through the process of transferring property through sales.
However, a newbie looking to
buy or sell property in Pakistan may have other questions:
· How do you go about finding the right kind of property dealer?
· What is the general amount of property dealer commission in
Pakistan?
· How to go about searching the right kind of property?
· How to set the right price for selling property in Pakistan?
· What are the reasonable property prices in Pakistan?
· What precautions to take when buying property?
Property Prices in Pakistan
If you are looking for the
property rates in your area, you can check them with local dealers and our
website. You will be able to compare property prices in Pakistan, your city,
neighborhood and know what to expect.
Property dealer commission in
Pakistan
There are no particular law
governing the work of real estate dealers and agents in Pakistan. The property
dealer commission in Pakistan is really a matter of custom. It can vary.
The usual practice for real
estate agents is to demand 1% of the
value of property each from buyer and seller as commission. If both the
buyer and seller has the same agent, each agent will keep the commission from
his own client.
However, they are not bound to
ask just 1%, sometimes, some agents may demand as high 2% of the value of
property. Or, they may be happy with much lower, fixed amount regardless of the
price of property.