Added terms for real state blog,

Author: prameshbajra

_posts/2024-09-10-terms-real-estate.md

@@ -1,30 +1,109 @@
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 layout: post
 title:  "Terms to know when buying a house in Nepal - Kathmandu"
-date:   2024-09-12
+date:   2023-09-12
 desc: ""
 keywords: "kathmandu, real estate, terms, buying, house, nepal, money, investment, property, land"
 categories: [kathmandu, real estate, terms, buying, house, nepal, money, investment, property, land]
 tags: [kathmandu, real estate, terms, buying, house, nepal, money, investment, property, land]
 ---
 
 
-So, you decide to buy a house but you have no idea what the process is like? In this blog I will try to give you a brief overview of the terms that you will come across when you are buying a house in Kathmandu. I will try to keep it as simple as possible. If you have any questions, please feel free to ask me. I will try to answer them to the best of my knowledge.
+So, you decide to buy a house but you have no idea what the process is like? 
+
+In this write up I will try to give you a brief overview of the terms that you will come across when you are buying a house in Kathmandu, Nepal. I will try to keep it as simple as possible. As usual, if you have any questions, please feel free to reach out. I will try to answer them to the best of my knowledge.
 
 **Brokers (दलाल)**
 
 You will most probably need a broker if you are searching for a house to buy since finding the house is quite a difficult task in itself. I would suggest you to reach out to as many brokers as you want since most of them do not charge the buyer for their services. They charge the seller. But, please do clarify this with them before receiving their services. And great thing about this process is that you can ask them about the entire process and they will tell you how things work. Luckily I found a nice guy who was helping me throughout the process and he did not charge me a penny. He even bargained to some extent with the sellers 😀. Let me know if you want his contact number.
 
+
+<br>
+
 This reminds me, if you like the house and are willing to go ahead with the purchase, PLEASE DO BARGAIN CRAZY !! If the seller says he is willing to sell it for 3 crores, POLITELY set your price to around 2.50 or 2.60. It gives you a breathing ground. I know this sounds like a huge cut but the fact is that the sellers keep a huge margin in houses. Trust me, when you both come to a middle ground and agree on the price, you will be thankful that you set your price low.
-    
-**Baina/Baina batta**
-    
-Before moving ahead with this section. Please do make sure you have done your due diligence about the house, land and overall details in general. You will have to verify who the house belongs to, if the land is guthi or raikad, and the entire history of the land and other things. You can do this by asking the photocopy of the Lalpurja from the house owner and heading to the Malpot office. Besides this, also ask the photocopy of the house designs/maps and reach out to an engineer just to be on the safe side. For newer houses that are built in Kathmandu at least, you are mostly safe since the land on which the construction will be taking place is not approved until a set of criteria is checked (Mapdanda). 
+
+Now that you have made that bargain. Please do make sure you do your due diligence about the house, the land and other details. You will have to verify who the house belongs to, if the land is guthi or raikad, and the entire history of the land including other things. You can do this by asking the photocopy of the Lalpurja from the house owner and heading to the Malpot office. They will provide you with all the necessary information. Besides this, also ask the photocopy of the house designs/maps and reach out to an engineer just to be on the safe side. For newer houses that are built in Kathmandu at least, you are mostly safe since the land on which the construction will be taking place is not approved until a set of criteria is checked and passed (Mapdanda - मापदण्ड). 
+
+Remember, for every house there are three documents that comes to the picture and are to be obtained in order: 
+1. DPC completion and construction completion certificate (डीपीसी तल सम्म भवन निर्माण स्विक्रिति पत्र)
+
+2. Construction permission certificate (निर्माण ईजाजत पत्र)
+
+3. Construction completion certification (निर्माण सम्पन्न पत्र)
+
+Now time to be familiar with some more terms:
+
+**Government malpot rate of land (सरकारी मूल्यांकन)**:
+
+It is the minimum valuation of the land/house that is set by the government and is far less from the actual value. For example: if the total amount you are going to buy the house at is 3 crores then this rate might be less than 70 lakhs. Sellers and buyers usually prefer to show this amount in the documents to save on taxes since the tax you pay on this amount is minimal. Let me give you an example in the next section (in profit tax [लाव कर] and property buying tax [राजस्व]).
+
+
+**Thaili rakam (थैली रकम)**:
+
+This is the amount that you show in the documents as the total amount that you are buying the house at. This includes the token amount as well. This is the amount on which you have to pay taxes to the government. This amount is agreed upon between the seller and the buyer. It can be between government malpot rate (सरकारी मूल्यांकन) and the total amount for the house. For example, if the total amount you are buying the house at is 3 crores and the government malpot rate is 70 lakhs, you can show the amount in the documents as 2 crores. This way you will have to pay taxes on 2 crores instead of 3 crores. This is a common practice in Nepal to save taxes. 
+
+In my case I paid the taxes on the full amount and I personally would suggest you to do the same. This way you will have a peace of mind and you will not have to worry about any legal issues in the future. Imagine if someone after decades comes and claims that the land belongs to them (Heir - हकवाला) and is a part of their inheritance (अंश) then according to the law it is the thaili rakam that you will be get back and not the amount you pay the seller. So, if you have paid the taxes on the full amount then you will get the full amount back. But if you have paid the taxes on the government malpot rate then you will get that amount back. Hence, it is better to be on the safe side and pay the taxes on the full amount.
+
+
+**Profit tax (लाव कर)**:
+
+This is the tax that is to be paid to the government at Malpot office when selling the house. This is usually paid by the seller. This is to be paid at the time of Malpot visit. Currently the profit tax is at 7%. Please note that the profit tax is to be paid on the profit and not on the total amount of the house. Remember, the greater the thaili rakam the higher the tax becomes. This is the reason why seller lean towards showing the government malpot rate in the documents. But this is Nepal and things are never straightforward. There are cases where the seller asks the buyer to pay the profit tax. Clarify at the beginning on who pays the profit tax at malpot. Most of the arguements in malpot happens because of this. So, please do clarify this with the seller before proceeding further with token amount (बैना).
+
+
+**Property buying tax (भवन खरिद राजस्व)**:
+
+This is the tax that is to be paid to the government at Malpot office when buying the house. This is usually paid by the buyer. This is to be paid at the time of Malpot visit. Depending on whose name the house is being transferred to the tax percentage depends. I think it is 2.5% for elderly citizen and 5% for men. Now you know why everyone buys property in their grandparents name. There are big tax savings here. Again, this too, is to be paid on the thaili rakam. If the thaili rakam is lower, the taxes are lower too. 
+
 
 I highly recommend you to watch this video before you proceed further: <a href="https://www.youtube.com/watch?v=PVSAyvvHpwk" target="_blank">https://www.youtube.com/watch?v=PVSAyvvHpwk</a>
-    
-- Sarkari mulyankan
-- Thaili rakam
-- Hakwala haru
-- Tax/ rajaswa
-- Lav kar
+
+**Baina/Baina batta (बैना बट्टा) (Token amount)**
+
+Once you are satisfied with the house, you can proceed with the baina. This is some amount that you pay to the seller to show that you are serious about buying the house. This amount can be decided by you and the seller and is to be clearly mentioned in the document. This document is to be written on Nepali Paper (नेपाली कागज) by a lawyer (लेखनदास) and to be signed by both parties. Remember that this document is to be verified and signed over at the ward office (वडा कार्यालय) as well. This process is super important since it is a proof that you have given the token amount to the seller and the seller has received it. Verifying this document at the ward office is important as it can help resolve any legal disputes that may arise in the future. Also, this has been made mandatory by the government of Nepal.
+
+Couple of important things that are included in the baina document are:
+
+1. Details of the buyer and the seller including their parents and grandparents names, citizenship number and current address on both ends.
+   
+2. The amount that you are giving to the seller as token amount.
+
+3. The amount you are going to purchase the house at (Includes token amount as well). For example, if you are buying a house for 3 crores and you have given 10 lakh as token amount, the total amount shown in this document will be 3 crores. Now, you will have to pay 3 crores - 10 lakh = 2.90 crores to the seller later.
+
+4. The seller agrees to sell the house to you and not anyone else. This also means that the baina amount has only been taken from you and not anyone else.
+
+5. The time frame within which the house is to be sold to you. Usually this is 35 days which can be extended if both parties agree. The transaction is to be completed within this time frame. This means you will have to get the house under your name and the full amount for the house is to be paid to the seller (more on this later on Malpot section).
+
+6. The cheque number and the name of the bank using which the token amount is to be paid.
+
+7. No further negotiations are to be made on the price of the house. 
+   
+8. If the baina document is not honoured, it is punishable and a fine is to be paid by the party who breaks the agreement according to the law.
+
+
+By the way, let me know if you are looking for a lawyer (लेखनदास). I can recommend you one. He is a nice guy and charges a very small reasonable amount. He helped me with the entire process and I am super thankful to him.
+
+
+**Malpot (मालपोत)**
+
+The day has finally come. Today will be the day you will get the house under your name and the seller will get the full money paid to his bank account. So you might be thinking, how such a huge amount is paid to the seller?
+
+The answer is **Good For Payment cheque**. This cheque is a normal cheque with few more stamp from bank. With this cheque, bank guarantees that you have that amount in your bank account. The bank freezes that amount and it gives the seller assurance that the amount is there ready to be credited to his bank account. With this guarantee from the bank the seller can happily tranfer the house under your name and head to the bank to cash the cheque. This is the most common way of paying the seller. I would recommend getting this good for payment cheque done a day before the Malpot visit. This way you will have a peace of mind and will not have to worry about the bank not issuing the cheque on time.
+
+> Please note that good for payment cheque can be used for any kind of transaction. It is not limited to house buying only. 
+
+Here are couple of things that you need to prepare before you head to the malpot office:
+
+1. Source of fund (आयो स्व्रोत): This can be any documents that proves how the buyer has obtained the money to buy the house. This can be documents ranging from stocks, bank loans, salary or remmitance slips. If you have loaned the amount from your friends or family then you will need to get it verified in the Ward office (वडा कार्यालय) first. As far as I know this is done as a part of Department of Money Laundering Investigation (सम्पत्ति शुद्धीकरण अनुसन्धान विभाग). This is to make sure that the buyer has not obtained the money through illegal means.
+
+2. Make sure all the heirs/claimant (हकवाला) are present at the malpot office along with the seller. This is to make sure that the house is being sold with the consent of all the heirs. This is super important to prevent any legal disputes in the future where someone might come and claim that the house belongs to them. People mostly do this these days and keep minimal thaili rakham is shown in the Malpot office.
+
+3. Make sure you have the baina document with you. This is to be verified at the malpot office. This is super important as it is a proof that you have given the token amount to the seller and the seller has received it.
+
+4. Make sure you have the Good For Payment cheque with you. This is to be handed over to the seller at the malpot office and the cheque numbers are also noted. Please note that multiple cheques that can be given to the seller at different denominations. The amount just has to equal the thaili rakam. If the real amount is higher than thaili rakam, then the remaining amount is be paid on agreement with seller separately.
+
+You will then be asked to sign on a bunch of documents and will also be asked to take a picture along with your fingerprints. After couple of hours or on the next day, you will be getting a new Lalpurja with your name on it. 
+
+**Congratulations, you are now the owner of the house.**
+
+
+