Real estate law in Nepal is primarily governed by the Lands Act 2021 (1964) and the National Civil Code 2017. These legal instruments form the backbone of property regulations in Nepal, covering land ownership, transfer, registration, partition, inheritance, mortgage, leasing, and land management. The Lands Act regulates land registration, measurement, and valuation procedures, while the National Civil Code establishes the legal framework for property rights, real estate transactions, and dispute resolution.
What is Real Estate in Nepal?
In Nepal, real estate refers to land and any permanent structures built upon it. This includes:
- Residential properties (houses, apartments)
- Commercial real estate (office spaces, retail stores)
- Agricultural land
- Undeveloped land plots
As per the National Civil Code 2017, immovable property in Nepal includes:
- Land, buildings, and attached structures
- Mines, minerals, and natural water resources
- Trees, plants, and crops rooted in the land
- Any movable property attached to immovable assets
Real estate transactions in Nepal typically involve the buying, selling, leasing, or mortgaging of immovable property. With rapid urbanization—especially in Kathmandu Valley—the real estate market in Nepal has experienced substantial growth in demand for residential and commercial properties.
Is Real Estate Legal in Nepal?
Yes, real estate ownership and transactions are legal in Nepal, regulated by a comprehensive legal system. The Constitution of Nepal 2015 recognizes the right to property as a fundamental right. However, several restrictions apply:
- Foreign nationals cannot purchase or own real estate in Nepal, except under special permissions.
- Land ceiling laws limit the amount of land individuals or families may legally possess.
- Forest land and public areas cannot be privately owned.
All real estate dealings must follow the legal procedures outlined in the Lands Act and the National Civil Code, especially regarding land registration with the Land Revenue Office. Government entities like the Ministry of Land Management, Cooperatives, and Poverty Alleviation regulate the sector. Real estate businesses must be licensed and compliant with applicable laws.
How Does Real Estate Work in Nepal?
The Nepali real estate market functions through an interconnected network of stakeholders and legal processes:
- Property Owners: Individuals or entities holding legal ownership.
- Buyers/Investors: Individuals looking to purchase land or buildings.
- Real Estate Brokers/Agents: Licensed intermediaries facilitating transactions.
- Banks/Financial Institutions: Offer mortgages and property loans.
- Government Agencies: Oversee registration, taxation, and zoning.
- Property Developers: Engage in construction and infrastructure development.
Procedure for Real Estate Transfer in Nepal
- Property Listing: Through agents or direct sellers.
- Buyer Search: Buyers locate suitable properties.
- Negotiation: Parties agree on price and terms.
- Due Diligence: Title verification and legal checks.
- Execution of Sale Deed: Legal documentation and payment processing.
- Registration: Transfer at the Land Revenue Office.
- Handover: Official transfer of property to the buyer.
How to Purchase Real Estate in Nepal
Step 1: Search and Selection of Property
Identify the location and type of property. Use brokers, websites, or personal networks to find options. Always verify the ownership documents to ensure the property is legally owned.
Step 2: Agreement for Purchase
Sign a preliminary Memorandum of Understanding (MoU) to confirm intent.
Step 3: Due Diligence
Confirm legal ownership at the Land Revenue Office, check for liens or disputes, and obtain an official valuation.
Step 4: Drafting Documents and Payment
Prepare a Sale Deed (Rajinama), organize payments (bank transfer or loan), and ensure citizenship and tax clearance documents are complete.
Step 5: Registration and Transfer
Register the transaction at the Land Revenue Office, pay all taxes and registration fees, and receive the updated title deed (Lalpurja) in the buyer’s name.
How to Transfer Real Estate in Nepal
Step 1: Preparation of Transfer Deed
Draft the sale deed (Rajinama) in Nepali with all transaction details.
Step 2: Property Valuation and Tax Assessment
Obtain a certified valuation and calculate all applicable taxes. Secure tax clearance certificates.
Step 3: Document Compilation
Gather citizenship certificates, original Lalpurja, tax receipts, and company documents (if applicable).
Step 4: Submission to Land Revenue Office
Present all documents and pay registration fees.
Step 5: Final Registration
The transfer is recorded and a new Lalpurja is issued to the buyer.
Mortgage of Property in Nepal
Chapter 12 of the National Civil Code 2017 governs property mortgages in Nepal. Two main types are recognized:
- Mortgage with Possession (Bhogbandaki)
- Mortgage without Possession (Drishtibandhaki)
Key Mortgage Rules:
- Must be registered with the Land Revenue Office.
- Interest rate is capped at 10% per annum.
- Bhogbandaki duration: max 10 years.
- Drishtibandhaki duration: max 5 years (renewable).
- Mortgagor can redeem property by repaying debt anytime.
- In case of default, foreclosure may be initiated through court proceedings.
Pre-emption of Immovable Property in Nepal
Under Chapter 13 of the National Civil Code, pre-emption rights allow:
- Neighboring property owners
- Close relatives
…to purchase a property before it’s sold to outsiders.
Rules:
- Must be claimed within 35 days of sale registration.
- Pre-emptor must deposit the full sale amount at the Land Revenue Office and file a formal claim.
Registration of Deeds in Nepal
Deed registration is mandatory and governed by:
- Chapter 14 of the National Civil Code 2017
- Registration Act 2034 (1978)
All land and property deeds must be submitted at the Land Revenue Office, accompanied by required documents and fees. Deeds must be registered within 35 days of execution.
Types of Deeds (लिखत) That Must Be Registered
As per Section 464 of the National Civil Code, the following require registration:
- Sale, gift, and mortgage deeds for immovable property
- Testamentary gift deeds
- Exchange deeds
- Partition or relinquishment deeds
- Family unification/separation deeds
- Lease agreements exceeding NPR 100,000/month
- Usufruct deeds
- Trust formation deeds
- Any deed required by law to be registered
Unregistered deeds may be rendered invalid in court.
Real Estate Services in Nepal
Nepal’s real estate sector offers the following services:
- Mortgage Brokerage: Help clients obtain home loans
- Property Brokerage: Buy, sell, rent facilitation
- Property Development: Land development and construction
- Property Management: Maintenance and management services
- Valuation Services: Real estate appraisal
- Legal Services: Real estate law compliance
- Surveying and Mapping: Land mapping and boundaries
- Home Inspection: Pre-purchase evaluation of property condition
Frequently Asked Questions (FAQs)
What is Real Estate Law in Nepal?
Real estate law in Nepal governs property ownership, land transactions, mortgages, leases, land use, and dispute resolution, guided by the Lands Act 2021 and National Civil Code 2017.
How Can I Buy & Sell Property in Nepal?
To buy property:
- Identify and verify property
- Conduct due diligence
- Sign a sale deed (Rajinama)
- Pay taxes and register the sale
- Receive the new title (Lalpurja)
To sell property:
- Set value and find a buyer
- Finalize sale agreement
- Complete legal transfer at the Land Revenue Office
How to Register a Real Estate Business in Nepal?
- Choose a structure (private company, partnership)
- Register with the Office of Company Registrar
- Get a PAN from the Inland Revenue Department
- Register with the municipality
- Obtain a license from the Department of Land Management
- Optionally, join the Nepal Land and Housing Developers Association
How to Start a Real Estate Business in Nepal?
- Market Research: Analyze property trends and needs
- Business Planning: Set financial and operational goals
- Legal Registration: Obtain all necessary permits
- Networking: Build contacts with stakeholders
- Marketing: Promote your services
- Property Portfolio: Acquire properties for resale or leasing
Who is a Real Estate Lawyer in Nepal?
A real estate lawyer in Nepal assists with:
- Property transactions and legal advice
- Title verification and due diligence
- Drafting and reviewing legal documents
- Property dispute resolution
- Lease, mortgage, and tax guidance
They must hold a law degree and be licensed by the Nepal Bar Council.