This Article discusses Nepal’s Property Law, which governs property transactions and resolves related disputes. This encompasses all aspects concerning real estate, such as property settlement, buying and selling of houses or land, contract drafting for tenants and landlords, intellectual property protection, etc.  The property law provisions in Nepal are contained in Part 4 of Muluki Civil Code, 2074.

1.Introduction to Property Lawyer in Nepal

In Nepal, property lawyers provide a comprehensive framework for governing property rights, obligations, and transactions. Assets in Nepal, such as cash, goods, and actions, make up the diverse property landscape. Legal rights and responsibilities over property are granted through ownership, allowing for use, transfer, and benefit derivation. Individuals have certain rights over property when they possess it, as long as they follow the law and any contracts.

2.General Provisions of Property

Unless stated otherwise, any cash, goods, or actions that can be used or transacted are considered property. “Goods” are tangible items that can be bought or sold. The classification of property as movable or immovable is based on its nature, not its physical form. Depending on who owns it and how it is used, property can be categorized as private, common, joint, community, public, government, or trust property. Buildings, attached commodities, minerals entrenched in the ground, natural bodies of water, and some types of structures permanently fixed to float over water are examples of immovable properties. Cash, merchandise for trade, valuables, intellectual property, securities, goodwill, and things other than real estate are all considered movable property. If there is a major loss or disturbance as a result of the separation, owners may sell their share or divide it with unanimous permission.

3.Ownership and Possession Law in Nepal

Ownership is established when a person acquires legal rights in any property according to the law with rights such as including the ability to use the property, transfer its title, mortgage or pledge it, deal with it in various ways, take benefits from it, construct physical structures or boundaries on it, and even take legal action regarding its acquisition or security.

Both individuals and their agents can acquire possession rights, and even those who are legally incompetent can do so through their guardians. The possessor of a property enjoys certain rights, including the uninterrupted possession and usage of the property, subject to applicable laws or contracts.

Additionally, if a person gains possessory rights over another’s property in good faith, they may be entitled to reimbursement for essential expenses incurred in managing, maintaining, or caring for the property while under their possession.

Moreover, adverse possessory rights may be acquired by a person who has possessed movable property for more than three years or land for more than thirty years, as if it were their own. However, this does not apply to government, public, community, or trust lands, and certain conditions must be met for such rights to be recognized.

4.Government, Public and Community Property

Government property, as defined, includes assets such as government buildings, roads, forests, rivers, mines, and others that are owned or controlled by the Government of Nepal. Public property encompasses assets serving public purposes, including ancient roads, wells, religious sites, markets, and more, with ownership vested in the public body or government.

Community property refers to land and structures collectively owned by a community for their shared use and benefit. The Land Revenue Office is tasked with updating details of government and public properties, with assistance from the Local Level authorities. Entities holding rights, possession, custody, or control over government, public, or community properties are obligated to ensure their protection and preservation.

Unauthorized actions such as registration, possession, cultivation, or construction on government, public, or community lands without proper permission are strictly prohibited. Complainants reporting violations related to property misuse may be eligible for rewards if their complaints are verified and proven to be true. Government attorneys are empowered to take legal action against violations affecting government or public properties.

5.Trust, Usufruct and Servitude

A trust is considered established when a person makes arrangements for another to manage a property owned by them for the benefit of a beneficiary. Trusts can be either public or private, with public trusts aimed at various social, economic, and community development objectives, while private trusts cater to specific individuals or groups.

Individuals intending to establish a trust must submit an application to the Registrar detailing property value, beneficiaries, trust duration, and other relevant information, along with necessary documents. The memorandum of incorporation of a trust must include details such as founders’ information, trust objectives, trustee details, beneficiary information, and operational guidelines.

Upon application submission, the Registrar assesses trust objectives and property details, registering the trust within 35 days if deemed appropriate, granting a registration certificate.

Usufruct is established when a property owner grants another person the right to use and benefit from their property through a contract. The owner of immovable property must create a legal document when granting usufruct rights, and in the case of property held in common, the consent of all owners within a joint family is required.

6.House Rent Law in Nepal

When a person with the right, possession, or ownership of a house lends it to another for a rent, it is considered a rental agreement. Renting or taking on rent a house unfit for human habitation from health and security perspectives is prohibited.

The owner must enter a written agreement with the tenant, detailing various aspects such as names, addresses, rent amount, payment method, and other relevant matters. Owners must allow tenants to use the house as agreed, provide necessary utilities, ensure tenant safety, and abide by the rental agreement.

Tenants must pay rent promptly, maintain the rented house, not cause disturbance to others, and adhere to the rental agreement. Tenants may sublet with owner consent, with obligations to inform the owner and maintain terms of the original agreement. Tenants must use the house as agreed and cannot use it for unauthorized purposes.

The rental agreement terminates under various circumstances, including expiration, mutual consent, or eviction. Tenants must hand over the rented house and goods in good condition upon leaving.

7.Transfer and Acquisition of Property in Nepal

Any action such as sale, donation, gift, or other transfers of property signifies a transfer of ownership rights. Individuals who are legally competent can transfer property either immediately or through a will. Certain transactions, like gifts below a certain value or transfers of movable property, may not require a formal deed.

Guardians or curators may sell property on behalf of those under their care, subject to legal provisions. Once property is transferred, the ownership rights shift to the transferee, either immediately or upon the death of the transferor. Certain restrictions exist, such as prohibitions on transferring common property without consent or transferring property already owned by another.

Restrictions apply to property transfers involving foreigners, requiring government permission. Foreigners acquiring property must transfer it to Nepali citizens within specified timeframes, or it may revert to government ownership.

8.Registration of Deeds in Nepal

Once a deed is approved by the designated office, it is considered registered. Certain types of deeds, such as those involving property transfers, mortgages, donations, exchanges, partitions, trusts, and leases above a certain rent threshold, must be registered to be legally recognized.

Individuals may also choose to register deeds not explicitly mentioned in the law. Deeds can be registered through a commission appointed by the office, with fees deposited by the applicant. Parties may register deeds in a district other than their residence or where the property is located, with the concerned office of that district.

Fees are typically paid by the parties involved in the transaction, as specified in the deed. The office responsible for registration must promptly execute transmission and registration of matters related to the deed, with priority given to deeds registered earlier.

9.Types of Property Based on Mobility

The primary property law in Nepal, the National Civil Code of 2074, classifies property into two types based on their mobility in Part 4, Laws Relating to Property, Chapter 1, General Provisions Relating to Property, Section 252.

I.Movable Property

Section 253 of the National Civil Code classifies the following properties as immovable:

1. Buildings, Land, and Structures
2. Goods permanently attached, including floating permanent structures
3. Mines, Stones, Minerals, Natural/Surface/Underground Water
4. Trees, Plants, Crops, etc.

Ii. Immovable Property

Section 254 of the National Civil Code classifies the following properties as movable:

1. Cash, Goods, Gold, Silver, Jewelry, Ornaments, Precious Stones, and other movable goods
2. Bonds, Securities, Bills of Exchange, Letters of Credit, Promissory Notes, and other negotiable instruments
3. Intellectual Property, Rights in Security, Trade Good-Will, or Franchise
4. Properties that are not classified as immovable property

Iii.  Types of Property Based on Ownership

National Civil Code Section 255 classifies property into seven different types based on ownership and the form of use:

1. Private Property: Property earned or acquired by an individual
2. Property in Common: Property owned by coparceners
3. Joint Property: Property owned by two or more persons, excluding coparceners
4. Community Property: Properties collectively owned by a specific area or community
5. Public Property: Property designated for public use
6. Government Property: Property controlled and/or owned by the government
7. Trust Property: Property belonging to a specific trust.

10.Property Rights in Nepal

Sections 276 to 284 of the National Civil Code outline the conferred rights and duties of property owners in Nepal. If an individual possesses certain property, they are entitled to exercise specific rights, while others have particular duties to fulfill concerning the property in Nepal. The property rights in Nepal encompass the following:

1. If one owns property in Nepal, no one can utilize or acquire it without the consent of the property owner. The Government of Nepal can requisition private property for public interest.
2. The exit of one’s house or the boundaries of one’s land, which affect the exit of the property owner, cannot be closed or obstructed by anyone else.
3. For a house owner in Nepal, no individual can enter the house or its compound without the owner’s consent, except when the law permits.
4. In the case of lands or other forms of property ownership, no one is permitted to encroach, trespass, or take possession of the property.
5. Within Nepal, constructing a house necessitates obtaining written consent from the landowner. Failure to do so allows the landowner to acquire the property at a price 25% lower than the market value.
6. House owners are prohibited from directing water toward other properties, houses, lands, or roads. Constructing a septic tank near neighboring lands is also prohibited. Additionally, a minimum distance of one meter from neighboring lands must be maintained when building a well.
7. Planting trees or other vegetation in a manner that could damage other properties, houses, lands, or possessions is prohibited.

11.Filing Property Cases in Nepal

Individuals seeking to file property-related cases in Nepal must initiate legal proceedings within six months from the occurrence of the unlawful action by the opposing party. However, for cases concerning the partition of property in Nepal, such cases must be filed within three months of the event.

12.Partition of Property

As a general rule, property can be partitioned in Nepal through mutual agreement among coparceners (individuals set to inherit the property). This typically entails executing a written deed in the presence of witnesses and registering it with the relevant authority. All coparceners, irrespective of gender, must receive equal shares of the property. 

Nonetheless, if any coparcener chooses not to claim their share, they can waive their rights via a signed deed, relinquishing specific or all portions of the property. 

However, if disputes arise concerning particular plots of land, the contested land can remain undivided while the other portions of the property are distributed. The resolution of the disputed land case falls under the jurisdiction of the District Court.

13.Conclusion

Property law in Nepal constitutes a comprehensive and interpersonal facet of civil law that has been comprehensively addressed by the National Civil Code of 2074. Property encompasses monetary assets, goods, or actions that are subject to trade or transfer for the purpose of deriving benefits. Property law in Nepal is intrinsically practical and necessitates legal expertise in both procedural and theoretical aspects, ideally guided by proficient legal practitioners. 

Property encompasses cash, goods, and actions with value and utility. Ownership entails legal rights such as usage, transfer, and benefit derivation. Property is classified into movable and immovable, private, public, government, or trust-owned. Ownership rights include usage, transfer, mortgage, and legal action. Possession grants rights subject to laws and contracts. Government, public, and community properties have specific regulations. Trusts, usufruct, and rental agreements are governed by detailed laws.  

Disclaimer: All contains available here are for general information purposes. A proper legal solution always depends on your particular circumstances thus seeking advice from an attorney who can provide assurances of the information contained herein and interpretation of it.  You are requested to seek legal advice for specific factual situations. If you need further information on this matter, please contact us at Legal Access Nepal Pvt. Ltd. 

Advocate: Yogesh Bhandari, Sushma Dahal and Pushpa Basyal

Contact no. 9851249077/ 9851346722