Josh and Mak International is synonymous with excellence in property law in Pakistan. As leading experts in the field, we offer comprehensive legal services, expert advice, and strategic guidance for all your property-related matters. Whether you require assistance with property transactions, title verification, lease agreements, real estate development, or dispute resolution, our dedicated team is here to help. Trust us to provide the highest level of professionalism and expertise in navigating the intricate landscape of property law in Pakistan.
Contact us today to benefit from our unmatched knowledge and experience in the field.
Property Law in Pakistan encompasses the legal framework that governs ownership and rights related to real estate and land. It differentiates between personal possessions and immovable property within the common law system. At Josh and Mak International, we pride ourselves on being at the forefront of real estate and property laws in Pakistan. With our deep expertise and extensive experience, we provide invaluable help and advice to numerous clients in navigating the complexities of property law.
In both common law and civil law systems, property law distinguishes between movable and immovable property. Movable property pertains to personal possessions, while immovable property encompasses real estate and land, along with the associated rights and obligations. Property law sets forth the legal principles and regulations that govern various forms of ownership and ensure the protection of property rights.
Josh and Mak International, we have a team of highly skilled and knowledgeable legal professionals who specialize in property law in Pakistan. Our expertise covers a wide range of matters, including:
- Property Transactions: Whether you are buying or selling property, our experts offer comprehensive guidance throughout the transaction process. We provide in-depth analysis, contract review, and negotiation support to protect your interests and ensure a smooth transfer of ownership.
- Title Verification: Ensuring the authenticity and legality of property ownership is crucial. Our team conducts meticulous title verification, examining land records, encumbrances, and any potential legal issues. This process enables us to provide you with accurate information and mitigate risks associated with property ownership.
- Lease and Tenancy Agreements: We assist clients in drafting, reviewing, and negotiating lease and tenancy agreements. Our focus is on protecting your rights and interests as a landlord or tenant, while ensuring compliance with applicable laws and regulations.
- Real Estate Development: If you are involved in real estate development projects, our experts can guide you through the legal complexities. We assist in land acquisition, zoning and planning approvals, construction contracts, and compliance with regulatory requirements.
- Dispute Resolution: In case of property-related disputes, our team offers strategic advice and representation. We aim to resolve conflicts through negotiation, mediation, or litigation, advocating for your rights and achieving favorable outcomes.
Trusted Partners for Property Matters:
With a strong track record of success, we have earned the trust of our clients who rely on us for expert advice and guidance in property law matters. We understand the unique challenges of the real estate landscape in Pakistan and provide tailored solutions to meet your specific needs.
Laws and Legislation regulating property and real estate in Pakistan
Real estate/property law is regulated under various statutes in Pakistan. Laws for individual businesses and taxation of different lands may vary, for example; capital gains tax is levied under Income Tax Ordinance, 2001 whilst capital value tax is levied under CVT ordinance, and so forth. However specific law for property/real estate acquisition and sale include the following :
• The Transfer of Property Act, 1882
• Land Revenue Act, 1967
• Stamp Act 1899
• Registration Act 1908
Establishment of real estate investment trusts in Pakistan
The concept of real estate investment trusts has recently been introduced in Pakistan as an incentive for real estate investment in the country. Any income from such trust is exempt from tax, subject to the condition that not less than 90 percent of its profit of the year is distributed among the unit holders.
Taxation of gains from real estate in Pakistan
The Constitution excludes legislation on the taxation of capital gains from the purview of the federal government. The income tax law has also been harmonized with these constitutional provisions by excluding the immovable property from the definition of capital asset, whose gain is liable to tax.
Despite this, profits on some transactions concerning immovable property is taxable under the income tax law e.g. disposal of property acquired as a stock in trade or with commercial intent to make profit. However, gains realized on the disposal of immovable property transferred as a consequence of family inheritance, gifts or without commercial motives, or if the property is held as a business capital asset, are exempt.
Taxation by the local authorities/provincial governments in Pakistan
In Pakistan, property tax/real estate tax is also imposed by the provincial governments as this was the practice prepartition.
Capital value tax on real estate related transactions in Pakistan
A Capital value tax is applicable in urban areas for residential property exceeding an area of one kanal and in case of commercial properties without any threshold of land area or size of the property. All transfers falling under the scope of purchase, gift, exchange, surrender, power of attorney and relinquishing the rights have been subjected to the capital value tax.
However, transactions between spouses, parents, grand parents, brothers and sisters through gift and inheritance have been excluded from its purview.
Real estate/property law and taxation implications for the landlord in Pakistan
All landlords must ensure that the lease of an immovable property is executed in writing under the specified ordinance. 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. Land lord should ensure proper tax deductions are done by the lessee and in case the same is not done he (individual /or company) may be required to deposit the tax with the treasury in due time.
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 eviction petition before the relevant rent controller.
Real estate/property law and taxation implications for the tenant in Pakistan
All Tenants must ensure that he makes payment of the rent either through a crossed cheque or, where payment is made through some other mode, 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 the rent controller in addition to availing other legal remedies as advised by his counsel.
If the Lessee is a prescribed person under tax law he should ensure proper tax deductions on payment of rent.
Acquisition or purchase of real estate/property in Pakistan
Purchasing a real estate in Pakistan can be a tricky process due to the lack of a standardized system in the country. Therefore, a complete and thorough search in respect of title of the seller of the real estate must be carried out. A general practice is to investigate the title of the current vendor and any previous owner(s) for the last 20 years. The original title document in favour of the vendor must be obtained along with other relevant documents including mutation in favour of the vendor, a fresh copy of fard, aks shajra and NOC/NEC as the case may be.
If the transferee 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.
Can Overseas Pakistanis and/or Foreigners invest in Pakistan Real Estate Industry ?
Non-resident Pakistanis, overseas Pakistanis 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.
The sale of real estate/property in Pakistan
The 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 a Defense Housing Authority (DHA) or in a housing society where a sales 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 an agreement to sell does not transfer title to a property in favor of the vendor. It does, nevertheless, create a right in favor of the vendor in case the vendor refuses to honor the terms and conditions of the agreement, to seek specific enforcement of the agreement to sell. Title on 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 the patwari.
The Importance of Legal Consultation in Property Transactions in Pakistan
In developed nations, property transactions are generally navigated with the assistance of legal professionals to mitigate the risk of fraud and legal complications. Regrettably, the practice in Pakistan often bypasses this critical step. Many individuals enter into property transactions without prior legal consultation, and as a result, become ensnared in legal complexities and fraud. The safest course of action is to consult a legal advisor for thorough verification and assessment of the property’s legal status, which not only ensures the legality of the transaction but also safeguards your financial interests.
At Josh and Mak International, we specialise in the sale, purchase, and leasing of various types of properties including commercial, agricultural, and residential. Our services encompass the complete procedural landscape, from the verification and registration of title documents to the procurement of essential revenue documents such as ‘Farad’, and securing the mutation of names (Intiqal) in revenue records. Furthermore, we undertake rapid legal proceedings against unlawful land grabbing, illegal possession, and fraudulent property transfers.
Procedure for Familial Property Transfer through Gifts in Islamabad
If an individual wishes to transfer property to family members via a gift, an application can be submitted at the Front Office, One Window Operation, CDA. The application must include an acknowledgement of Oral Gift on a stamp paper attested by a 1st class Magistrate. Additional requisite documentation includes:
- The original allotment letter to be surrendered
- Property Tax Clearance Certificate from Revenue Directorate, CDA
- Indemnity Bonds (Transferee/Allottee)
- Attested photocopies of N.I.C
- Statement recorded before the concerned Deputy Director, duly stamped and sealed
- NOC from Building Control Section (BCS), CDA
- Bank Draft of either Rs. 3000/- or Rs. 5000/- depending on the case
- Attested photocopies of NICs of two witnesses
Understanding Titles and Transfer Taxes
The title of a property is essentially a bundle of rights that the owner possesses. These rights may include, among others, the rights to possess, use, lease, and sell the property. Title deeds serve as the legal evidence of ownership, detailing aspects such as land area, built structures, usage, value, and previous ownership.
The Mechanics of Property Transfer
In legal parlance, the transfer of property refers to the conveyance of the title from one person to another. For instance, when Mr. B purchases a property from Mr. A, this buying transaction essentially signifies a transfer of property. Other instances that qualify as property transfers include inheritance and gifting among others.
It is crucial to understand that the term ‘person’ in legal documents is not confined to human beings. It can also refer to other legal entities such as companies, trusts, associations of persons, and firms. These entities can own property titles and therefore have the legal authority to transfer these titles.
It’s imperative that the transferor has a clear and legal title to the property they intend to transfer. For instance, an individual owning a 2,500 square foot piece of land cannot legally transfer 2,501 square feet of it.
Where and When Does the Transfer Take Place?
The property transfer is formalised in governmental records to ensure legality and transparency. A legal document, often termed as sale deed, registry, or registered transfer deed, is prepared to serve as a record and evidence of the transaction.
The necessity for property transfer is most commonly triggered during the sale of the property. Transfers are also requisite upon the death of the property owner, to pass the asset to the legal heirs. Other scenarios that necessitate property transfers include gifting properties and property acquisitions for projects.
Financial Aspects of Property Transfer
The transfer process entails costs that are distinct from the agreed property price between the buyer and the seller. The cumulative financial implication of a property transfer includes:
- Transfer Fee
- Stamp Duty
- Capital Value Tax
- Other applicable taxes
Therefore, the equation for the total cost of acquiring a property would be:
Total Cost
=
Property Price
+
Transfer Taxes
Total Cost=Property Price+Transfer Taxes
Taxation on Property Transfer
Transfer taxes are levied at the time of the transaction and vary based on the type and value of the property. These may include but are not limited to:
- Transfer Fee
- Registration Fee
- Stamp Duty
- Notary Fee
- Real Estate Transfer Tax
- Gift Tax
- Gain Tax
- Capital Gains Tax
- Property Tax
- Estate Tax
- Immovable Property Taxes
In conclusion, property transfers in Pakistan can be a complex affair, fraught with legal and financial pitfalls. Consulting with experienced legal professionals, such as those at Josh and Mak International, can provide invaluable protection against these risks. We offer a comprehensive suite of services aimed at guiding you through every stage of the property transfer process, ensuring that your investments are secure and legally sound.
Navigating the Legal Landscape of Property Transactions in Pakistan
Just like any other country, the purchase and sale of real estate in Pakistan is governed by a set of specific laws. Ignorance of these laws can lead to complicated legal disputes, financial loss, and a great deal of stress. Understanding these laws is therefore paramount for anyone involved in a property transaction, be it the buyer, the seller, or the real estate agent. Here is a look at the four main laws that govern property transactions in Pakistan.
Four Pillars of Property Law in Pakistan
- Registration Act 1908: This is a cornerstone legislation that delineates the procedures and requirements for registering real estate transactions. Comprising fifteen sections, the Act is comprehensive, covering the establishment of registration offices, timelines for document presentation, and the venues where such documents can be submitted. It leaves little room for ambiguity and ensures clarity in property registration.
- Stamp Act 1899: This Act is pivotal in revenue generation for the government. It outlines the costs associated with stamp papers, which are obligatory for formalising property transactions. The rates of these stamps can fluctuate due to inflation or changes in governmental policies. Nevertheless, the Act mandates legal validation of property transactions through the use of stamps.
- Land Revenue Act 1967: This Act lays out the structure and authority of land and revenue departments, detailing the powers and jurisdictions of various offices within these departments. It also encompasses critical aspects like land surveys, boundary markings, and collection of land revenue.
- Transfer of Property Act 1882: This Act provides an in-depth guide on the procedures and prerequisites for property transfer. It specifies who is eligible to transfer property and under what conditions, thereby protecting the interests of buyers who invest their hard-earned money into acquiring properties.
Frequently Asked Questions About Property Transactions
- Do I Need an Agent to Sell a Property?: While it’s not mandatory, having an agent simplifies the process of finding a suitable buyer. The commission to the agent is generally paid after both parties agree on the property price.
- What Preparations are Needed Before Selling?: The seller and buyer need to prepare the sale deed, a crucial document that contains all pertinent details of the transaction.
- What Happens After Finding a Buyer?: Upon finding a suitable buyer, it is advisable to visit the property together and negotiate the price. The title deed, which proves your ownership, should be readily available.
- What is Stamp Duty?: Imposed by provincial governments, stamp duty is a tax on property transactions, payable by the buyer. The amount is based on the property value.
- When is the Title Transferred?: The title is transferred when the buyer pays the seller. Subsequently, a new set of documents is prepared, and the property is registered in the buyer’s name. Both parties then meet the local registrar to formally declare the transfer.
Practical Tips for Property Buyers
- Check Historical Ownership: Never underestimate the importance of verifying past ownership records. A skilled lawyer can assist you in this regard, thereby safeguarding you from potential property disputes.
- Verify Seller’s Rights: Always make sure the seller has the proper title, possession, and the right to transfer the property. Ensure that all dues related to the property are settled.
- Beware of Mortgages: Inquire for the original title document. If the property is mortgaged, the owner won’t have it.
In conclusion, property transactions in Pakistan are fraught with legal complexities. However, a thorough understanding of the laws and careful planning can make the process straightforward and secure. At Josh and Mak International, we offer expert legal advice and services that guide you through each step, ensuring a smooth and legally sound transaction.
Understanding Key Terms and Procedures in Pakistan’s Real Estate Sector
Navigating the property landscape in Pakistan involves becoming familiar with a host of terms, procedures, and legalities. These are not only essential for a smooth transaction but also safeguard against possible fraud or legal complications.
Decoding Key Terminology in Pakistani Real Estate
- Aks Shajra: This term refers to the graphical representation of a specific plot of land or Khasra, essentially pinpointing its exact location and its relation to surrounding lands.
- Fard or Fard Malkiat: A Fard is a government record maintained by local revenue authorities, most commonly by the Patwari. It documents various types of titles and rights in a property.
- Registry or Bay Nama: The Registry is the formal written agreement between the buyer and the seller, confirming the transfer of property ownership.
- Intiqal or Mutation: This is an official record that marks the change in property ownership, typically drafted by a relevant revenue officer. It is the most reliable record of title transfer for most types of properties in Pakistan.
- Iqrar Nama: Also known as the Agreement to Sell, this document outlines the terms and conditions under which the property will be transferred. It is a preliminary agreement and does not finalise the transaction.
- Mukhtar Nama: This is the Power of Attorney, a legal document that grants one individual the authority to act on behalf of the property owner.
- Tattima Registry: This serves as a supplementary Sale Deed, adding additional content or clarification to a previously signed Sale Deed.
- Khasra: A Khasra is a specific piece of land identifiable by a unique number recorded by the government.
- Gardawri: This is the practice of maintaining records about who is cultivating and possessing agricultural land.
How Josh and Mak International help you
Our company is involved in providing services and assistance to all our valued clients in the buying and selling of both movable and immovable properties & real estate in Pakistan. We also provide the services needed to facilitate the required permissions, etc. for setting up various industries, factories, commercial complexes, industrial and residential estates et al right across Pakistan. We also provide specialist advice on Capital Value Tax, Excise Duties and Registration Fees. To be specific our expert lawyers/attorneys offer the following:
• Obtain a fresh copy of Fardnama from relevant sub-registrar
• Obtain a certified copy of Aks-Shajra (map)
• Obtain a certified copy of Tatima/Supplementary Map of the property
• Investigate & verify title documents of the property
• Investigate & verify mutation in favor of the vendor
• Demarcation details
• Drafting of the sale and purchase documents
• Registration of conveyance deed
• Transfer of title
• Entries in relevant government record
• Obtain a NOC, if necessary
• Verification of the Power of Attorney of the vendor, if any
• Verification of other documents e.g lease deeds, mortgage deeds, gift deeds etc., if any
Please get in touch now for complete advisory package on the procedure for sale/purchase of real estate in Pakistan, gift of real estate in Pakistan, lease of real estate in Pakistan, mortgage of real estate in Pakistan and taxation of gains from real estate in Pakistan, taxation of real estate in Pakistan and the setting up of real estate investment trusts in Pakistan.
[bestwebsoft_contact_form]
Legal Framework Governing Property Transactions
Property transactions in Pakistan are chiefly governed by the Transfer of Property Act 1882, the Land Revenue Act 1967, the Stamp Act 1899, and the Registration Act 1908. Several provincial and municipal laws also apply. A Sale Deed, commonly referred to as a Registry or Bay Nama, is the principal document used in property transactions. It must be registered with the appropriate sub-registrar’s office and affixed with the required stamp duty.
In modern housing societies, property transactions are often simplified. An allotment letter serves as conclusive proof of legal transfer from seller to buyer, speeding up the process and reducing the chance of fraud.
Rented or Leased Properties
Lease agreements for periods less than a year do not require registration, but those exceeding a year do. Both landlords and tenants must adhere to the terms of the lease or rent agreement, and failure to do so can result in legal proceedings, typically expedited in comparison to standard civil suits.
Cautions for Property Buyers
Property transactions in Pakistan are fraught with potential pitfalls, due to an outdated land records system. Therefore, it’s crucial to consult someone experienced in property matters to verify the seller’s title. Buyers should also examine historical ownership records, preferably for the last 20 to 30 years, to avoid future disputes. Various documents like the original Sale Deed, a fresh copy of the Fard, and Aks Shajra should be inspected carefully.
Transactions through attorneys add another layer of complexity. In such cases, the buyer should try to verify the identity and authority of the attorney by examining the official Power of Attorney documents and cross-checking them with the records of the sub-registrar’s office.
By being aware of the terms, procedures, and laws, one can navigate the complex property landscape in Pakistan more effectively. Consulting experts like Josh and Mak International ensures that you are legally protected at every step of your property transaction journey.
Real Estate Laws and Practices in Pakistan
Legal Framework
In Pakistan, the legal landscape governing real estate is primarily based on four key laws:
- The Transfer of Property Act, 1882: This act stipulates the rules and procedures for transferring property, including the types of people who are eligible to transfer property and the method of doing so.
- Land Revenue Act, 1967: This law deals with the administrative aspects of land and the powers of the revenue officers.
- Stamp Act, 1899: This act sets out the types of stamps that must be used for different types of documents, including those for real estate transactions.
- Registration Act, 1908: This law mandates the registration of various documents, including those related to property transactions.
Types of Real Estate Transactions
- Sale of Real Estate: While the Sale Deed is usually the key document in real estate transactions, in some areas like Defence Housing Authority (DHA), a Sale Deed is not used. Instead, an allotment letter from the authority serves as the title document.
- Purchase of Real Estate: Prior to purchasing any property, it is crucial to conduct a thorough title search of the property going back at least 20 years. Authenticity of the power of attorney, if any, should also be verified.
- Lease/Renting: Leases for periods shorter than a year are not required to be registered. However, for leases extending over a year, registration becomes necessary.
- Gift of Real Estate: For Muslims, oral gifts of real estate are permissible but not advised due to the difficulties involved in proving them. For others, a gift deed, appropriately stamped and registered, is required.
- Mortgage of Real Estate: Mortgages can be either legal or equitable. Legal mortgages require a registered mortgage deed, while equitable mortgages are often created through the deposit of title documents.
Tax Considerations
The Pakistani Constitution prohibits the federal government from legislating on the taxation of capital gains from real estate. However, profits from transactions that involve property acquired for trade or commercial profit-making are taxable.
Practical Implications
- For Landlords: It’s advisable to execute the lease agreement in writing. Legal action can be taken if a tenant fails to comply with the terms.
- For Tenants: Payments should preferably be made via crossed cheque, and a receipt should be obtained when paid in cash to avoid any disputes.
- For Buyers: In cases involving power of attorney, it’s advisable to verify the document’s authenticity and, if possible, to consult directly with the original property owner.
- For Sellers: If selling as an attorney, ensure that the power of attorney has been appropriately stamped and registered to validate the sale.
Understanding these aspects is essential for anyone looking to engage in property transactions in Pakistan. Legal consultation is often recommended for conducting thorough due diligence and ensuring that all regulatory requirements are met. Given the complex nature of property laws in Pakistan, being well-informed can save parties from potential fraud or legal disputes. Whether you are buying, selling, or leasing property, knowledge of these laws and procedures is essential for a seamless transaction.
Special Documents and Terms in Pakistan’s Real Estate
- Aks Shajra: A graphical representation of a specific piece of land, often used to identify the exact location and adjoining properties.
- Fard or Fard Malkiat: Maintained by local government revenue authorities, this is a record of various types of titles and rights in a property.
- Registry: Also known as ‘Bay Nama’ or ‘Moahida Bay’, it’s a written document confirming the transfer of property from the seller to the buyer.
- Intiqal or Mutation: A written order indicating a change in the government’s record of titles, confirming the transfer of property from the seller to the buyer.
- Iqrar Nama: Essentially an ‘Agreement to Sell’, it records the terms under which the property will eventually be transferred. However, this document alone is insufficient for a legal title transfer.
- Mukhtar Nama: Also known as ‘Power of Attorney’, it appoints a person to act as the legal attorney for the property owner for specific transactions.
- Tattima Registry: This is a supplementary or additional Sale Deed that adds to the contents of an already signed Sale Deed.
- Khasra: It’s a unique identification number for a specific piece of land.
- Gardawri: An act of maintaining the record of the person(s) cultivating and possessing a land, primarily agricultural.
Rented or Leased Properties
For landlords, having a well-drafted lease or rent agreement is essential. Leases exceeding a year must be registered. Tenants, on the other hand, should ensure that they adhere to the payment terms stated in the lease and should take appropriate action if the landlord attempts to unlawfully evict them.
Purchasing Property: A Risky Affair
Purchasing property in Pakistan can be fraught with risks due to an antiquated land records system. It’s highly advisable to consult someone experienced in property matters to perform a thorough check on the property title. Important documents like the original Sale Deed, a fresh copy of the previous title transfer document known as a ‘Fard’, and ‘Aks Shajra’ should be carefully inspected.
Power of Attorney: A Complex Matter
Transactions involving power of attorney are particularly complicated and risky. Verifying the identity, powers, and authorities of the attorney is crucial. The document granting rights to the attorney should be examined carefully, and its authenticity should be verified.
Conclusion
The real estate sector in Pakistan is governed by a set of complex laws and documents. Understanding them is crucial for anyone engaging in property transactions. Always conduct thorough due diligence and consider seeking professional legal advice to navigate the complexities of real estate transactions in Pakistan. This will safeguard you against potential fraud and other legal complications. Knowledge is your best tool for ensuring that your real estate transactions are both legal and secure.
What inheritance laws apply in Pakistan?
Inheritance provisions in Pakistan depends on religious affinities.
All persons of sound mind, regardless of their nationality or residential status, are entitled by law to inherit immovable and/or movable property in Pakistan, but the inheritance provisions depend on whether the deceased was a Christian, a Hindu, or a Muslim. Within the Muslim category, the definitions of heirs, and their shares, are decided according to their sects and sub-sects, e.g. Cutchi Memon, Khoja, Sunni or Shia.
The judiciary depends on the domicile of the deceased.
The competent judges to handle property and inheritance issues are those in the last domicile of the deceased. If this is contested, or unknown, then the judiciary depends on where the property is located. For property located in Pakistan, a Civil District Court, or a High Court, is competent to handle inheritance issues.
National laws may apply to non-Muslims domiciled outside Pakistan.
If a deceased foreigner is not a Muslim, and his/her national law states that the applicable inheritance law is that of the country where the deceased is domiciled, or the country where the deceased’s property is located, then the laws of that country will be be applied in Pakistan. Consequently, if a Hindu or Christian with assets in Pakistan died whilst domiciled outside Pakistan, then in most circumstances the courts in Pakistan would distribute the assets according to the provisions of the foreigner’s national inheritance law.
Muslims domiciled in or outside Pakistan must follow Muslim Law.
The courts in Pakistan, in matters of succession to the estate of a Muslim, can only apply Muslim inheritance law, irrespective of the domicile or nationality of the deceased. If a Muslim citizen of Pakistan dies whilst domiciled in foreign country, then the laws of his domicile can not be applied to his estate in Pakistan.
Muslim Law of inheritance in Pakistan is based on the following:
• There is no concept of a will, and all shares are distributed to legal heirs by intestate succession.
• The shares of the inheritance depend on the closeness of the relationship of the legal heirs to the deceased. Blood relations have the closest ties. It is not possible here to provide a simple summary of how these shares are distributed. It depends on how many children, sisters, brothers, mothers, and other relatives the deceased person had, and it changes from case to case. A Muslim lawyer in Pakistan should be consulted for more specific details.
• In most cases, a man’s share of the inheritance is twice that of woman’s. Any gift given by the woman’s fiancé is her own, and her husband has no legal right to claim it, even after marriage. On marriage, she is entitled to receive a marriage gift called Mohr, and this is her own property.
• Muslim heirs acquire an absolute interest in specific shares of the estate of their ancestor, even before distribution. The time of distribution is not material.
Succession opens at the position prevailing at the moment of death of the ancestor. ‘Vested inheritance’ may occur i.e. if an heir dies before distribution, but was alive at the ancestor’s death, the share of his/her vested inheritance passes on to his/her heirs.
Property can be donated during the lifetime of a Muslim.
A Pakistani Muslim can freely give away any personal property before death. No one, including the legitimate heirs, can challenge this decision after the death of the donor.
Transfers of property in Pakistan must be registered.
The Registrar of Properties in the area of Pakistan where the property is situated records all transfers, following name changing procedures at various departments, including the Building Control Authorities, Local Government (City Government), Excise and Taxation (Property Taxes) and Utility Companies. Courts look at the names on these records to determine the legal ownership of inherited property in Pakistan.
Property and Real Estate Laws
The legal framework surrounding property and real estate transactions in Pakistan is primarily governed by the Transfer of Property Act 1882, Land Revenue Act 1967, Stamp Act 1899, and Registration Act 1908. Each of these laws serves distinct functions, from regulating the sale and purchase of property to setting the stamp duty and registration processes.
Types of Real Estate
Real estate in Pakistan can be acquired through a Sale Deed, except in specific cases like properties within housing authorities like DHA, where an allotment letter serves as the title document. Although an agreement to sell can be drafted before the Sale Deed, it doesn’t transfer ownership.
Purchase Precautions
Buyers must conduct a thorough search concerning the seller’s title to the property, often going back 20 years to check for any irregularities. If the seller is acting as an attorney for the actual owner, the power of attorney must be stamped and registered properly.
Lease and Renting
Lease agreements for less than a year do not require registration. However, if the lease is for more than a year, it must be registered. Both landlords and tenants have specific rights and responsibilities, and both parties should act within the legal parameters defined by their lease agreement.
Gift and Mortgage
Gift of property must be made in writing and should be registered, although oral gifts are permitted for Muslims under specific conditions. Mortgages can be either legal or equitable. Legal mortgages require a registered mortgage deed, while equitable mortgages can be created through the deposit of original title documents.
Tax Implications
Taxation on gains from real estate varies. While the Constitution excludes the federal government from taxing capital gains on immovable property, gains on transactions deemed commercial in nature can be taxed.
Inheritance Laws in Pakistan
Inheritance laws in Pakistan differ based on the deceased’s religious affiliation. The applicable laws are determined either by the last domicile of the deceased or where the property is located. Courts competent to handle inheritance issues are the Civil District Court or the High Court.
Muslims, whether domiciled in Pakistan or abroad, are subject to Islamic law for inheritance. There is no concept of a will in Muslim law, and inheritance is distributed based on intestate succession. The shares are generally predefined, depending on the deceased’s relations at the time of death. In most cases, male heirs receive twice as much as female heirs.
Non-Muslims are subject to their own religious laws or, in the case of foreign nationals, the inheritance law of their domicile country.
Conclusion
Given the complexities surrounding property transactions and inheritance laws in Pakistan, it is highly advisable to consult a competent legal expert to navigate the intricacies. Whether you’re buying, selling, leasing, or inheriting property, a thorough understanding of the applicable laws can safeguard you from potential legal issues.
