Buying land in mega cities such as Dhaka or metropolitan cities such as Chattogram has now become more lucrative than ever. The soaring real estate prices has got people frantically searching for land, and those who already own land are taking the next step for extra income- developing the land into livable apartments. There are no taxes or zakat involved in land ownership. Therefore, it is no surprise that so many people vy for a piece of land. It is a safe, lifelong investment that can be passed on to the next generation. If you are looking to buy land for real estate development later on, here is a guideline of the procedure you need to follow.
Ownership Rights of Immovable Property
To truly understand how buying land works, you must understand the ownership rights that come with land. The rightful owner of a land can transfer the property to a new owner wholly or partly. When an owner legally authorizes another individual the right to transfer their property, that authorized individual is known as a power of attorney. This person can simply transfer the property to a new owner on behalf of the original owner, but cannot claim ownership of the land.
The new owner’s title has to be in all public records and other records of right. Hire an expert legal team or a real estate agent so that you can understand the legal implications behind purchasing land.
Ministry of Land
The Ministry of Land deals with all land administration processes in Bangladesh. It separates records of ownership from records of revenue. Records of ownership include land records, Bangladesh land survey details, maintenance of records, etc. The Land Revenue offices deal with land taxes, registration fees, mutation fees, stamp duty fees, etc. The purchaser of land should physically conduct research and survey before considering payment. Assess the current conditions and ground rate of the land; verify whether it is possessed by someone else. Do check whether the seller has appointed a power of attorney for the transfer of property. The buyer should also assess the legal status of the land (whether it is under mortgage or long-term lease).
Checking Documents in Favor of Seller
As a buyer, you must be aware of whom you are buying the land from. Some background check is necessary on your part, to ensure that there are no discrepancies, and that the seller truly is the legal owner of the land. There are many cases in Bangladesh where a person can possess a piece of land, but actually does not have any ownership rights. When a person does not have ownership rights, they cannot sell property legally. Therefore, it is crucial that the buyer check everything properly. The following documents must be in favor of the seller:
- Sale Deed: The prospective buyer is recommended to check the chain of ownership that the land has been through. At least 25 years of ownership should be clearly available.
- Khatiyan: The buyer and their lawyers should verify the seller’s ownership title in the Deed with the khatian records. Khatian shows Bangladesh land survey details and establishes ownership of the seller, whether it was obtained via purchase or inheritance from previous owners. Remember that if the seller provides only a draft khatiyan, but not a certified one, you should not proceed with buying. Cross-check the khatian details with the records at the DC Office (Deputy Collector’s Office) as well, to see if the khatian is in the seller’s favor.
- Dag: Check the plot number and holding address and whether it belongs to the seller.
- Land Report: It is favorable for a buyer to check the land report. This document gives an idea of the current status of the land, chain of ownership, land taxes (khajna), land record, registration status, etc. Prohibited land, or a disputed land riddled with lawsuits, or a land up for government acquisition cannot be sold or mortgaged. If there is a building existing on the land, the buyer should verify the building plan and relevant approval letters, and check whether the building was constructed according to plan.
Once you have checked the seller’s end of documents, it is time for the buyer to do their part. These are the documents you should prepare for a smooth transfer of land ownership.
- Non-encumbrance Certificate: This is a document obtained from Land Revenue offices or sub-registry offices, which is used during property transactions as an evidence of the entitlement of the property.
- Deed and Stamp Duty: A new deed of transfer of ownership has to be drawn between the seller and buyer, with terms and conditions of both parties clearly stated in the document. The deed has to be prepared on stamped paper that costs around 3% of the property value. This fee is known as stamp duty.
- Taxes: The buyer has to pay a number of taxes in order to claim ownership of the land from the seller. First, they must pay the local government tax to the concerned city corporation or municipality offices. Then, a capital gains tax (CGT). CGT is not necessary when buying rural or agricultural lands. VAT of 1.5% must be paid, but it is applicable only for areas under the municipal corporation.
- Registration Fees: A registration fee in favor of the sub-registry office has to be paid to an authorized bank. Once the payment is complete, you must present the receipt of all fees at the sub-registry office to begin the application for registration. A certified registration document is prepared within a week, with the buyer’s name on record. The new sale deed can be obtained in around six months.
- Mutation and Khatian: Once the ownership transfer is successfully registered, the change must also be registered with the Land Revenue Office. This is to ensure that the buyer, who is now the new owner, is responsible for all the land taxes and fees from the day the property has been transferred to them. An application to the assistant commissioner (AC) is made with the full details of the land, who will ensure that a relevant check is conducted. Then the AC Land will issue a new mutation and khatian documents with the name of the new owner. Mutation takes around 45 days.
The newly purchased land should be recorded in the latest Bangladesh land surveys when they are conducted in the area. While this is a basic guideline of buying land, it is always best to consult legal and real estate experts to ensure a smooth process. There are certain types of land that have additional requirements. For example, Waqf property requires prior permission of the respective Waqf administrator, and the Deed is executed by a different authority. If the property is leased from RAJUK/CDA, with every transfer of property, a permission from the Ministry of Housing and Public Works is required. Khas land cannot be sold or mortgaged. Land eroded by rivers cannot be mutated easily. So do take care of these issues before buying land. Good luck!