:: Property Law in Pakistan
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We deal with all kinds of Property cases including Transfer of Property by Act of Parties, Transfer of Property (Moveable or Immoveable, Tangible or Intangible), Sale, Mortgage, Lease, Charge of Immovable Property and Exchange, Gifts and all kinds of Claims regarding Property, Accession, Occupancy Rights, Vested Interests, Contingent Interest and Conditional Transfer etc.
Property is thing which is peculiar or proper to any person; that belongs exclusively to one. In the strict legal sense, an aggregate of rights which are guaranteed and protected by the Government. The term is said to extend to every species of movable right and interest. More specifically, ownership; the unrestricted and exclusive right to a thing; the right to dispose of a thing in every legal way, to possess it, to use it, and to exclude every one else from interfering with it. That dominion or indefinite right of use or disposition which one may lawfully exercise over particular things or subjects. The exclusive right of possessing, enjoying and disposing of a thing. The highest right a man can have to anything; being used to refer to that right which one has to lands or tenements, goods or chattels, which no way depends on another man’s courtesy.
According to Transfer of Property Act 1882 “Property means (i) the thing itself, or (II) some or all the rights in a thing.”
Land and anything permanently affixed to the land, such as buildings, fences, and those things attached to the buildings, such as light fixtures, plumbing and heating fixtures, or other such items which would be personal property if not attached. The term is generally synonymous with real property.
Classification of Property
Transfer of Property
“Transfer of property means an act by which a living person conveys property to one or more other living persons.”
Modes of Transfer
Transfer of Property Act 1882 only deals with those transfers that take place by the act of parties.
Transfer of Property by act of parties
Property can be transferred to the other persons with or without certain conditions. Transfer of Property Act defines certain modes where transfer takes place by act of the parties that are enlisted as follows:
Rights that may be Transferred
Person who can Transfer a Right
The transferor must be:
The person who transfers a right is called the “transferor” and the person to whom transfer is made is called the “transferee”.
Unless a different intention is expressed or implied, a transferor of property passes to the transferee all the interest in the property which the transferor is, at the time of the transfer, capable of passing and the accessories or legal incidents which follow the said property shall also be passed on along with the principal property. For instance, if a house is sold, the easements annexed thereto shall also stand transferred.
Unless expressly required by law to be in writing, a transfer may be made orally.
Conditions relating to Transfers
Conditions that can be imposed
Transfer in favor of an unborn person
A transfer can be made in favor of an unborn person by creation of prior interest in favor of living person subject to the condition that the transferor transfers his entire property to the said unborn person. The interest created in favor of the unborn person shall take effect and rest in the said person on birth only if he comes into existence before the termination of the last prior estate.
(1) Transfer of Property by way of Sale:
According to Transfer of Property Act 1882, “Sale is a transfer of ownership in exchange for a price paid or promised”. Transfer by sale is effected by the following methods:
Rights and liabilities of Buyer and Seller
The seller is bound:
Liabilities of seller after completion of sale:
The buyer is bound to:
Buyer’s liabilities after completion:
(2) Transfer of Property by means of Mortgages and Charges:
Section 58 of the Transfer of Property Act says that “A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.”
Types of Mortgage
Mortgages of Movables
The transfer of Property Act deals with mortgages of immovable property only, while the Contract Act, 1872 embodies the law as to pledges of movables. But a mortgage of movables is also recognized in Pakistan.
Principles Applicable to the Mortgage
Doctrine of Redemption
It is the right of the mortgagor, on tender at a proper time and place of the mortgage money, to require the mortgagee to deliver the mortgage deed to him, to deliver possession if it is given and to transfer the property to him.
Doctrine of Foreclosure or Sale
According to Section 67 of the Transfer of Property Act foreclosure is the right of the mortgagee. By this remedy the mortgagor is directed by court to pay up the mortgage money within a certain period and it is decreed that if he fails to pay up the amount, the mortgagor would be absolutely debarred of his right to redeem the property. The result of such a foreclosure decree is that the mortgagor cannot claim back the property from the mortgagee, who becomes the owner of it. This doctrine is not applicable to the simple mortgage; it applies only in case of mortgage with conditional sale.
Concept of Marshalling Securities
If the owner of two or more properties mortgages them to one person and then mortgages one or more of the properties to another person, the subsequent mortgagee is, in the absence of the contract to the contrary, entitled to have the prior mortgage-debt satisfied out of the property or properties not mortgaged to him, so far as the same will extend, but not so as to prejudice the rights of the prior mortgagee or of any other person who has for consideration acquired an interest in any of the properties.
Concept of Subrogation
Subrogation is the right to step into the shoes of another, to acquire all his rights and to enforce them in his own names. It means substitution. When a subsequent mortgagee pays off a prior mortgagee he is subrogated to the rights of the prior mortgagee.
In a charge there is no transfer of property but the creation of a right of payment out of property specified. In a mortgage there is a transfer of an interest. A mortgage therefore good against subsequent transferee while a charge is only good against subsequent transferee with notice.
(3) Transfer of Property by way of Leases:
Section 105 of the Transfer of Property Act defines lease. A lease is a transfer of a right to enjoy such property, made for a certain time, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Forms of Lease
There are also other forms of leases but the important ones are mentioned above.
Distinction between tenancy and lease
Distinguishing factor between “tenancy” and “lease” is not the mode of payment of rent but the period for which land is rented out by landlord. In case of “lease” fixed period is stipulated while in case of “tenancy” occupier holds land till the same is terminated expressly or by implication.
Leases how made
According to Section 107 of TPA a lease of immovable property from year to year, or for any term exceeding one year can be made only by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. (See details in the article named as “Leasing”).
Rights and liabilities of lessor and lessee
To put it briefly the liabilities of the lessor are:
The rights of lessee are:
The liabilities of lessee are:
Determination of Lease
A lease may be determined by:
Effect of holding over
After the determination of the lease:
The concurrence being evidenced by either acceptance of rent paid by the lessee, or by other acts. The result is that there arises a new tenancy.
(4) Transfer of Property by means of exchanges:
When two persons mutually transfer the ownership of one thing for the ownership of another, neither thing or both things being money only, the transaction is called an “exchange”.
Exchange of money
On an exchange of money, each party thereby warrants the genuineness of the money given by him.
(5) Transfer of Property by gifts:
Section 122 of TPA defined the property as a transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee.
Acceptance when to be made
Acceptance of the gift must be made during the life time of the donor and while he is still capable of giving. If the donee dies before acceptance, the gift is void.
Transfer how effected
For the purposes of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor, and attested by at least two witnesses.
For the purposes of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.
Gift of existing and future property
A gift comprising both existing and future property is void as to the latter.
Gift to several of whom one does not accept
Section 125 says that a gift of a thing to two or more donees, of whom one does not accept it, the gift is void to the extent of the share of the person who refuses it and the share reverts to the donor.
When gift may be suspended or revoked
The donor or donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked.
Where a gift consists of the donor’s whole property, the donee is personally liable for all the debts due by and liabilities of the donor at the time of the gift to the extent of the property comprised therein.
Not applicable to Islamic law regarding gifts
The provisions of gift contained in the Transfer of Property Act 1882 are not applicable to any rule of Islamic law regarding gift.
Important doctrines regarding Transfer of Property
Transfer by Ostensible Owner under Section 41
Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it.
Fraudulent Transfer under Section 53
Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed. This rule does not impair the rights of a transferee in good faith and for consideration.
Every transfer of immovable property made without consideration with intent to defraud a subsequent transferee shall be voidable at the option of such transferee.
Part Performance under Section 53-A
Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, the transferor or any person claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract.
Registration of Transactions made under Transfer of Property Act
The registration of transactions i.e. mortgage, sale, exchange, lease, gift etc. shall be made under Section 17 of the Registration Act 1908 if the value of the transaction is upto or more than Rs. 100. The documents have to be submitted to the Registrar after complying with all requirements of the Registration Act along with the prescribed registration fee. In the case of an assignment of a Mortgage the consideration for the deed of assignment shall be deemed to be the value for Registration.
Stamp Duty on Transactions
Schedule I of Stamp Act 1899 prescribes stamp fee / duty which is to be charged on the documents
Article 23 of the First Schedule of the Stamp Act prescribes the fixed stamp duty on conyances which also includes sale of movable and immovable property according to Section 2 (10) of the Stamp Act 1899.
Article 31 of the first schedule prescribes the stamp duty on the documents of exchanges.
Article 32 describes the further charge on mortgaged property and the duty imposed on such instruments.
Article 33 prescribes the stamp duty on the instruments of gifts.
Article 35 describes the stamp duty on the documents of lease.
Article 40 talks about the duty on mortgage deeds.
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