Property investment comes with its own sets of perks and drawbacks. While it can yield great returns and help you earn maximum profits, your land can be grabbed, stolen, and damaged. Thankfully, the government has some laws for landowners to protect property rights in Pakistan that help combat the issue and mitigate the problems related to the real estate market.
Let’s take a look!
Transfer of Property Act, 1882
Approved in 1882, the Transfer of Property Act (ToPA) is one of the oldest property transferring laws in Pakistan. The act defines how and what types of properties can be transferred.
It deals with the transfer of property between individuals. Anyone who is legally eligible and is of sound mind, can transfer properties with or without placing any conditions. The individual can do as they please, as long as it is allowed by the law.
Furthermore, you cannot transfer properties that you will receive in the future, or to your unborn child.
Note: If you want to know more about this law and procedure, check out our recent post where we have shared a complete guide to property transfer in Pakistan.
FAQs about Transfer of Property Act, 1882
ToPA covers immovable properties and some movable properties.
There are eight chapters and 137 sections in this act.
There are about six types of properties under the property act.
- Actionable Claim
Stamp Act, 1899
The Stamp Act was introduced in 1899 by the British Government in the pre-partition era to keep a track of the buying and selling property transactions between individuals.
The stamp act not only serves the purpose of keeping track of the individuals, but also helps generate revenue for the government. Since the stamp duty makes a document authentic in the eyes of law, it holds monetary value which is transferred to the government funds.
What is stamp duty?
The tax paid by the individuals for certain documents is called the stamp duty. It varies, based on the value of the product being stamped.
There are two kinds of stamps:
- Impressed stamp: This type of stamp is engraved on the document.
- Adhesive Stamp: They can be stuck to the document using an adhesive substance.
- Postal Stamps: It is a kind of adhesive stamp, but it has some limitations. For example, they can only be used for transactions related to postal services.
- Non-Postal Stamps: Not having that many limitations, as compared to the other adhesive stamps, they can be used as revenue stamps, court fee stamps, and insurance policy stamps among many of its other uses.
Who pays the stamp duty?
As mentioned in the Section 29 of the Act, individuals who are responsible for the payment of stamp duty are defined by the kind of agreement. We have mentioned further details below:
- Administration Bond Agreement: They can also be termed as Pawn Agreement, Pledge Agreement, Bills of Exchange, and Bonds. In agreements such as these, the individual who carries out the agreement is responsible for the payment.
- Lease Agreement: The tenant or the intended tenant is supposed to pay the duty.
- Certificate of Sale: The buyer of the property being transacted will be liable to pay the duty.
FAQs about Stamp Act
An E-stamp or an electronic stamp, is a machine based procedure for the government to pay for non-judiciary stamping duties. It can also be used as a non-judicial stamp.
There are a couple of benefits that come with the modernisation of the stamps.
- Less time consuming
- Easy to use
- Easily accessible
These stamps are used for the registration of documents and insurance policies, etc.
These stamps are used for legal and court work.
If one is unsure about the amount of the stamp duty, they should make a case about it and refer to the Controlling Revenue Authority.
The act has 8 chapters and 79 sections.
Registration Act, 1908
A comprehensive law, encompassing all aspects of registration of property in Pakistan, was passed in 1908. The aim of the act was to bring authenticity to the documents holding information about the property.
We have mentioned the objectives of this law below:
- Proper recording of the properties
- Prevent fraud
- It provides the property holders their rights
- The registered documents are considered valid under the eyes of the court.
- The registered documents provide information about the rights and issues related to the land.
The section 17 of the act clearly defines the documents that are made compulsory to be registered by the government and the documents which are not necessary to be registered.
FAQs about Registration Act
Not registering your property with the government would be disadvantageous in the following ways:
- A non-registered deed of adoption would not give any power to the adopter.
- A non-registered property becomes useless, it does not have any right or duty or liability.
- A non-registered property cannot be legally transacted.
The effects of getting a property registered are defined in the section 47 & 48 of the act such as:
- The registered land will be in operation that is legal.
- The registered documents will be considered superior to any oral agreement, unless the agreement accompanies the delivery of possession.
Yes, it is mandatory to register an agreement to sell, otherwise the agreement will not be recognized by the authorities.
The act is applicable all over Pakistan, but the provincial government has the authority to revoke the application of this act in certain districts.
There are 8 chapters and 41 sections under the Registration Act, 1908.
Land Revenue Act, 1967
The act gives instructions on collecting land income. The income is the 1/4th of the production of the land that the government receives from the owners of the land.
Under this act, the lands of Pakistan are classified, not only this but the setting of boundary of such lands, as well as the transfer of such lands fall under this act.
The lambardars or the village head has special powers given to him/her. It is a state privileged position, and gives control to the lambardar, over 50-100 villages.
FAQs about Land Revenue Act
Yes, females and public servants can apply for the position of a lambardar. The youngest individual to be appointed as a village head was 15 years old.
The lambardar has many duties. Just a few of them are:
- Collection of land revenue
- Collection of rent
- Report any damage done to the government buildings
Joint Property Ownership
Joint Property Ownership is the law that defines ownership of a property owned by two individuals. There are two types of joint property ownership:
- Based on entirety:
It can only exist between married couples. One partner does not need the permission of the other to do as he/she wishes to with their part of the property. However, both the partners would need to agree for the sale of the property or a mortgage.
If one partner dies, the other partner receives the share of the other one by default.
- Based on the rights of survivorship:
This type of partnership can exist between anyone. The partners have an equal right that is how much each of them has invested, to the property. In some areas of Pakistan, a partner can do whatever they wish to do with the property without the permission of the other owner, however, just like based on joint ownership, the property cannot be mortgaged or sold without the permission of the other owner. In case one of the partners dies, the other partner would have to provide a death certificate of the other owner to receive ownership of the entire property.
Benefits of Joint Ownership
There are some advantages that come with joint ownership of property.
- Each property owner has complete rights over any products that come from the property.
- Transfer of property is not that time consuming, in case a partner dies, the other just has to provide a death certificate to get complete ownership of the land.
- When both the partners apply for a loan, the sum of their income is taken into account, thus as the income gets high, so does the amount of loan approved.
FAQs about Joint Property Ownership
For joint ownership that is based on survivorship, there are no restrictions when it comes to choosing the partner.
After the death of a partner, the property gets transferred to the other partner.
The consent of both the partners is required for the sale of the property.
These are the most basic property laws in Pakistan. We have summarised the most important aspects of the acts, so that whenever you need to sell or buy property in Karachi, Lahore, Islamabad or anywhere across Pakistan’s real estate market, you know all about the procedure and no one can scam you.
Disclaimer: The main purpose of this guide is to give a small brief of property laws in Pakistan to our readers. It serves as a general piece of information for the property owners who want to know more about their legal rights and obligations. The information in this blog is not legal advice. In case you need help with anything, it is best to seek professional help.