Important Documents needed in a Property Transaction

WHAT ARE THE DIFFERENT TYPES OF PROPERTY DOCUMENTS?

To finalize buying or transferring of a property by an investor, there are a variety of property documents they need to skim through. All the paperwork important in this process fulfils every formality and it is necessary for all the parties involved to know the significance and purpose of each document.

The various documents needed to finalize a property transaction include:

• SALE DEED

• MOTHER DEED

• APPROVED PLAN OF THE PROPERTY

• BANK APPROVAL CERTIFICATE

• ENCUMBRANCE CERTIFICATE

• POWER OF ATTORNEY

• PROPERTY TAX RECEIPTS

• COMPLETION CERTIFICATE

To initiate the process, a sale deed bases the foundation of purchasing property.

• WHAT IS A SALE DEED?

Sale deed serves as the most vital legal document in this process. It consists of the agreement made between the buyer and the seller and the terms they deem important to add into it. It is proof of conveyance of property from the buyer to the seller and legally binds them to everything consented between them. It is comprised of the names, addresses and ages of the parties with the intention not to deceive. It also contains the total plot area, identification number, details of construction, the exact location and surroundings. Apart from the sales agreement, it has the clause of sale consideration, time limit of the passing of the title, default clause and the payment methods etc. This document is drafted by a lawyer aware of the relevant laws about the transaction of property.

 

An example of a sale deed can be seen above. The second document that is needed for property transaction is a mother deed.

• MOTHER DEED

This legal document, also known as parent document, mainly determines the ownership of a property and provides you with the history of past dealerships and conveyances, helping one identify the original owner of the property. By establishing current ownership, it makes future transactions easier.

After the mother deed, the approved plan of the property holds more importance.

• APPROVED PLAN OF THE PROPERTY

This makes the approved plan of the property that is subject to the transaction assured. It is necessary to know that this document has no legal issues before moving forward with a property purchase. It is necessary to acquire this document because if not, it leads to a violation of rules laid down by the authority controlling the property’s construction and they may deconstruct it as a consequence.

• BANK APPROVAL CERTIFICATE

An approved document from the bank is the next step required in this process. Once property is scrutinized and examined in case of any legal issues, a bank approval certificate is a very significant document released by a bank.

• ENCUMBRANCE CERTIFICATE

To prove free title and ownership, this document is next needed in a property give and take. It is issued by registration authorities to assure that the property involved in the transaction is not liable to any mortgages, unclear loans or legal dues.

An example of an encumbrance certificate can be seen above.

• POWER OF ATTORNEY 

This next document is written confirmation of permission given to an individual to purchase, rent or sell property on behalf of someone else. It legally transfers power of managing assets on behalf of the owner. It is the delegation of legal powers to someone to lease or sell property. This document makes sure that your finances and decisions in terms of it are handled well if you are unable to do so. It can also be revoked and gets automatically cancelled upon the death of the parties involved or their choice.

An example of this legal document can be seen above.

• PROPERTY TAX RECEIPTS​​​​​​​

This next document almost completes the process of property transaction. In terms of property tax receipt​​​​​​​s, Capital Gains Tax (CGT), Capital Value Tax (CVT), Stamp Duty and Withholding Tax or Advance Tax are the different types needed. These receipts are proof of tax levied on the annual rental value of the property being paid by the seller.

• COMPLETION CERTIFICATE

As the last document needed for property transaction for an investor, this certificate confirms that the property has been constructed according the way it was required by the building plan. It also makes sure that it doesn’t cross or violate any boundaries set by the local authorities, affirming its legitimacy as well. Until the builder doesn’t obtain a completion certificate, the owner will not be able to possess the house. A completion certificate is provided by the local authority. In Karachi, the Sindh Building Control Authority (SBCA) would issue one. And for Lahore and Islamabad, the Lahore Development Authority (LDA) and the Capital Development Authority (CDA) would be responsible for issuing this document.

An example of this document can be seen above.

Before proceeding to buy a flat in a building under construction as well, a buyer should initially review the approved plan of the building and of the floor that he is buying. He must ensure that the building does not violate any local boundaries and check the title of the land ownership on which it is build and the bylaws relevant to that area.

 

Therefore, these are the major documents required to make a property transaction complete and it is important to be aware of the significance of each of them and why they are so necessary for any processes involving the transaction of any kind of property.