Real estate laws in Nepal are governed and impacted by the state. The history of real estate laws in Nepal goes back to the comprehensive peace accord (CPA) of Nepal. On 21 November 2006 landowning was included in the 3rd section of CPA that aimed conflict management and political, social and economic transformation, discouragement of absentee land ownership, land pooling, and utilization of land use policy for uplifting agricultural production.

There are particularly two articles mentioned in the interim constitution of Nepal that focuses on land reform.

First, Article 3.7 which is provided for a policy to introduce scientific land reform by ending feudal land ownership, and second, Article 3.10 says to provide land and other economic resources to the landless and land-poor. In retrospect, the 2017 election’s manifesto of three major political parties proclaimed to resolve all land-related issues through scientific land reform.

The following are some of the key legislation governing real estate laws in Nepal:

a) Ownership and possession of property law:
Ownership and possession of property law in real estate deal with the ownership and possessory right of the property. It deals with the acquisition, competency, and repeal of such rights over the property to avoid the dispute related to the rights of owners and possessors. This law is backed by the compensation and resolve to handle the matter of ownership and possession of the property.

b) Transfer and acquisition of property:
The provisions under the property law have provided the explicit right for the transfer of personal property whereas the joint property or property in common cannot be transferred without obtaining the consent of all who inherits such property. The possible remedies have been provided so that the transfer of property without violating the rights of the person.

c) Government, Public, and Community property:
The property law also exists to the government, public, and community property. It is strictly restricted to transfer the government, public, and community property in the individual’s name which is the key factor that needs to be taken into consideration while dealing with such matters.

d) Trusts:
Trust property refers to assets that have been placed into a fiduciary relationship between a trustor and trustee for a designated beneficiary. Trust property may include any type of asset, including cash, securities, real estate, or life insurance policies. Trust property is also referred to as 'trust assets' or 'trust corpus.' In Nepal, the concept of Guthi has been practiced from time immemorial and the procedures related to its registration are well provided in the provisions of law. The trusts are established in Nepal mainly for the protection of cultural heritage and social welfare programs.

e) Registration of deeds:
Why is it important to have a properly recorded deed? Once you sign your deed, your property is considered transferred from the seller to the buyer. However, for you to be covered to protect yourself from future claims on the title, you should record the deed. The procedures of registering the deeds and their time of validation have been provided to secure the proprietary rights of people.

Furthermore, due to the high boom in the real estate scenario of Nepal and the upsurge in the loan, Nepal Rastra Bank (NRB) had issued some regulatory directives to banks and financial institutions to limit the loan flow in real estate. The Monetary Policy of 2010/11 is one of them, it has provided some guidelines for real estate financing. Paragraph 59 of the policy urges banks and financial institutions to curb down the real estate and housing loan to a specified limit. This is to reduce the risk associated with the high concentration of loans in a single sector. Similarly, paragraph 98 of the policy has reduced the limit in housing and residential lending. It has also restricted lending to the 10 percent limit in land purchase and plotting (NRB, 2010).

Also, According to The Lands Act, 2021(1964), these are additional laws and regulations related to the process of buying and selling property in the context of Nepal, formulated by the Nepal Law Commission.
1. Sale and disposal of Land:
● The prescribed authority shall sell or dispose of, as prescribed, the land acquired or confiscated under this Act to a local person of that Village Development Committee or Municipality from which that land has been acquired or confiscated. In making such a sale or disposal, priority shall be given to the freed bonded labor, downtrodden (Dalit), indigenous, and nationalities (janajati), out of the local landless people.
● The land obtained on such sale and disposal shall be registered in the name of such person, as the landowner thereof.
● The prescribed authority may give the land according to Sub-section (1) to the former landowner, tenant, or any other person until the sale or disposal of the land for tilling under any terms and conditions.

2. To maintain registration book of lands:
● “ The prescribed authority shall register in the registration book, as prescribed, the land sold or disposed of under Section 2137…………… and then forward a copy thereof to the Land Revenue Office or the Land Administration Office, in the case of a District where the Land Revenue Office does not exist; and the Land Revenue Office or the Land Administration Office shall make the transmission of the land accordingly.”

3. To receive the value of land:
● A person who obtains a land on the sale and disposal thereof under Section 21 shall pay the value of that land in such sum as to be set at the prescribed rate of that land in cash in a lump sum as prescribed or in installments in such times as prescribed from time to time. Interest on the sum of value at the rate of five percent per annum38 for the period of payment shall also be charged on and collected from a person who makes payment in installments. Provided that, if a person desires to pay the whole amount payable by that person or one or more installments or any portion thereof at some time in advance of the time limit prescribed for making payment of installment, that person may make such payment.

● “The prescribed authority shall get the amounts to be collected under Sub-section (1) deposited, as prescribed, in a separate account opened at a ……………..39 bank.”

● If a person fails to make payment of any amount of installment payable under Sub-section (1) within the time limit but appears to make payment thereof no later than one month after the expiry of the time limit, the prescribed authority shall receive the amount of installment, by imposing a fine in a sum to be set by Ten percent of the amount of installment.

● If a person fails to make payment of any amount of installment payable under Sub-section (1) even within one month after the expiry of the time limit, the concerned land as well as the amount of installment, if any, already paid for the value of that land shall be confiscated, by order of the prescribed authority.

4. Formation of house and land valuation committee:
● The Government of Nepal may, for purposes of the Act, form a house and land valuation committee (hereinafter referred to as the “committee”) comprising governmental and non-governmental members by a notification published in the Nepal Gazette from time to time for each urban area specified under the Act.

● The committee formed under sub-rule (1) shall comprise of at least one governmental or non-governmental engineer or overseer.

● After any committee formed under sub-rule (1) has completed its functions under these Rules, the Government of Nepal shall, by a notification published in the Nepal Gazette, dissolve that committee.

5. Prohibition on sale and disposal of land:
No person who obtains a land on the sale and disposal thereof under Section 21 shall sell and disposes of, or otherwise convey the title to, that land to anyone else or partition it and mortgage it to or furnish it as security with anyone except a bank until the amount of value payable under Section 22 is paid in full or until the elapse of ten years after the date on which the person is entitled to hold that land, whichever occurs later.

6. Punishment:
● If one obtains a land by producing a false statement at the time of sale and disposal of the land according to Section 21, the land shall be confiscated by order of the prescribed authority.

● If a person who obtains a land on the sale and disposal of the land according to Section 21 sells or disposes of the land or conveys the title thereto or partition it or hypothecates or mortgages the land or crop yield thereof in contravention of any matter contained in Section 23, ● such transactions shall be void and the concerned land, as well as the amount incurred by the purchaser of the land, shall also be confiscated by order of the prescribed authority.

7. Confiscation of land obtained by producing false statement or in contravention of Rules:
● If Government of Nepal believes that any person has obtained any land that has been confiscated or devolved on Government of Nepal under this Act, by producing a false statement or by way of sale and disposal in contravention of the Rules framed under this Act, Government of Nepal may cause any officer to hold necessary inquiries into such land.

● If it is found after the inquiries held under Sub-section (1) that any person obtained the land by making a false statement or by way of sale and disposal in contravention of the Rules framed under this Act, the Government of Nepal may confiscate such land and re-sell and redispose of the same, as prescribed.

Real estate laws protect buyers from unscrupulous sellers who might attempt to misrepresent the property to a potential buyer and it could also protect the environment from a buyer who wants to make alterations that are damaging to the land or natural environment. We suggest you research and dig deeper before buying and selling property!