Types of Real Estate in Pakistan

Sale of real estate in Pakistan

Sale of real estate in Pakistan normally takes place through a title document known as a Sale Deed, except in certain cases e.g. purchase of real estate in Defence Housing Authority (DHA) or in a housing society where sale deed is not executed for transfer of title in real estate and an allotment letter/transfer letter from the authority or the society, as the case may be, is deemed to be the title document. Some people, before execution of the sale deed, may opt to execute an agreement to sell. However, such agreement to sell does not transfer title to a property in favor of the vendee. It, nevertheless, does create a right in favor of the vendee, in case the vendor refuses to honor the terms and conditions of the agreement, to seek specific enforcement of the agreement to sell. Title in an immovable property is only deemed to transfer once such Sale Deed or title document has been executed. A sale deed must be affixed with requisite stamp duty and it must be registered with the relevant sub-registrar. After registration of the Sale Deed with the sub-registrar it must be ensured that a mutation of such sale is entered in the register of mutations kept and maintained by patwari.

Purchase of real estate in Pakistan

Before purchasing a real estate in Pakistan a complete and thorough search in respect of title of the seller to the real estate must be carried out. A general practice is to investigate title of the current vendor and any previous owner(s) for the last 20 years. Original title document in favor of the vendor must be obtained along with other relevant documents including mutation in favor of the vendor, a fresh copy of fard, aks shajra and NOC/NEC as the case may be.

If the vendor is selling the property in the capacity of an attorney of the owner then it must be ensured that the power of attorney is affixed with appropriate stamp duty and it has been duly registered with the relevant sub-registrar. If possible, contact should be made with the owner(s) of the property and authenticity of the power of attorney must be confirmed. A holder of a forged and fabricated power of attorney may not be able to transfer a valid title in an immovable property to a third party.

Non-resident Pakistanis, overseas Pakistan and foreigners may also purchase immovable property in Pakistan. Their presence in Pakistan at the time of execution of the title document is not necessary.

Lease / Renting out of Real Estate in Pakistan

Landlord’s point of view
Landlord must ensure that lease of an immovable property is executed in writing. Lease of immovable property for a period of less than a year does not require compulsory registration. However, lease of immovable property for a period of more than a year must be registered.

If the tenant refuses to pay rent or for any other reason as stated in the lease agreement and allowed under the law the landlord may terminate the lease. If the tenant refuses to vacate the premises the landlord may file an ejectment petition before the relevant rent controller.

Tenant’s point of view

Tenant must ensure that he makes payment of the rent either through a crossed cheque or where payment is made through some other mode then a receipt must be obtained from the landlord. In case the landlord unlawfully or unjustifiably attempts to evict the tenant the tenant may file a petition before rent controller in addition to availing other legal remedies as advised by his counsel.

Gift of Real Estate in Pakistan

Gift of real estate in Pakistan must be made in writing. There is, however, a qualification to this general rule in case of a Mohammedan. A Mohammedan may make an oral gift of an immovable property. Although allowed under law it is not recommended to make oral gifts of immovable property because it may become difficult to prove an oral gift. Where a gift deed is executed it must be affixed with appropriate stamp duty and it must be registered.

An oral gift, in case of a Mohammedan, takes effect if all three of these under mentioned conditions are satisfied:

Declaration of gift;

Acceptance of the gift by the donnee during the lifetime of the donor
transfer of possession of the subject matter of the gift by the donor to the donnee. Once all of the above-mentioned conditions are satisfied then the fact of a gift is deemed to be established.

Mortgage of Real Estate in Pakistan

Legal mortgage

A legal mortgage in respect of an immobile property may be created after execution of a mortgage deed. A mortgage deed must be affixed with appropriate stamp duty and it must be registered with the relevant sub-registrar.

Equitable mortgage

An equitable mortgage in respect of an immovable property may be created simply by deposit of original title documents e.g. sale deed, allotment letter etc. with the mortgagor. It is not required to be registered, however, a general practice is to get a lien marked in respect of such mortgage.