How Does KDA lease Karachi Properties?

The leasing process is a legal process of utilizing the legal format to attain an asset over a period of time. This article explains what the lease is, how the lease works and how KDA leases its property to the city of Karachi. 

The article therefore can be drafted as:

• What is a lease? 
• Types of leases
• KDA lease process of Property 
• Other Form Processing

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What is a Lease?

As per textbook definition:

“An implied or written agreement specifying the conditions under which a lessor accepts to let out a property to be used by a lessee”

This is how we explain the lease in easier terms. 

• A lease is a contractual obligation. Whether it is in the form of a written contract or an implied agreement, it holds accountability for both parties.
• The buyer is called the lessee and the seller is called the lessor. The term used for the agreement between both parties is called a lease.
• Lease is usually used for non-movable objects i.e. properties, land, cars, machinery, plant, equipment, etc. 
• The lessee uses the property for a definite period of time, while the lessor expects payments or benefits for that definite period of time.
• The agreement holds consequences for those who fail to oblige. 

Common Types of Leases

The lease types depend greatly on the terms of the lessor. The obligation may be entirely taken up by the tenant or the homeowner. The lessor has the right to form a contract that might bring out more value or revenue from the property. 

There are many types of leases just in the property sector. Many of which are discussed right below.

Absolute Net Lease

In Absolute net lease, the net burden is on the tenant. The homeowner usually builds the property and does necessary fixtures to suit the needs of the tenant. 

The tenant pays all the bills and does the necessary payments for the property such as insurance, taxes, maintenance, etc. The properties are in the form of units that are usually used by the companies, especially the larger enterprises that agree to contracts and own the outlays of the promise.

Modified Gross Lease

The modified gross lease places all the burden on the property owner. This means the insurances, taxes, and maintenance are covered by the owner of the property. 

The other cost such as janitorial, utility, and interior maintenance is managed by the tenant. However, the owner may charge the premium for maintenance and insurances covered.

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KDA leases process of Properties

The process of leasing property by KDA is different but systematically complicated. Once you get to know the process, things get easier to understand. We happened to contact KDA’s upper officer Syed Saad, who explained the process.

The process of the KDA sub-lease deed is as follows

• KDA sublease is often applicable for those residential and commercial plots. Such plots are allotted by only KDA to the buyers.
• The KDA sub-lease is set for 99 years only. With an exception of Old Nazimabad, which has a year sublease limit of 50 years (that has now be updated with 99 years as well)
• Sub-Lease is agreed by KDA and Allottee/lessee in KDA’s office that the property should be in use for not more than 99 years. After 99 years the sub-lease can be renewed as per the newer terms agreed upon by both parties.
• In a sublease, the address and location must be defined. The definition of address and location may include but not limited to:
  1. Block number
  2. Plot number
  3. Measurements such as Length, width, and site plans.
• And locations nearby such as 
  • Roads, properties near, opposite, or adjacent to the leased plot.
  • Parks, any other landmark.

This includes their plot and block numbers, the width of the road.

• KDA sub-lease process requires the allottee/lessee to apply at KDA main office. The Application Form should include all the relevant plot documents, such as:
  • Allotment order
  • Site plan
  • Possession order
  • Acknowledgment of possession
  • All payments receipt 
  • Copy of CNIC/NIC
  • All the copies of the above documents.
• The KDA officer, after submission of these documents, will create Challan for the remaining dues, which is made as per the area size and Township/Scheme regulations. 

After Challan, the allottee/lessee is informed about the registered lease date. On that specific date, the Revenue Sub-division office of that appropriate area is approached and signed by both the representative of KDA and Allottee. Both of them should be accompanied by 2 witnesses and a lawyer with three of their signatures as well.

The lease deed will then be registered and the confirmation report will be sent back in the next 60 days. The process will then be completed.

• The charges however vary. The charges are decided by the KDA and a lawyer/Agent of the property. The size and value are a few key factors that decide the value of the property.

Other Forms Processing

The Process of leasing is as follows 

Owner’s File

The first step a KDA officer would perform is to check all the files of the owner(s). The owner’s documents are matched with the records present in their database.

The data is verified. The owners must be proven to own the house and to do that all the legal documents are produced as required. The KDA system works with properties that are even hundreds of years old. Therefore, producing those old documents can be hard when it is needed. 

Missing Documents

The missing documents are common for many properties like land, and houses can date back even before the British Era. The relevant procedure is carried out:

• Firstly, an FIR is filed for a missing report. You don’t need to worry, it’s merely a legal formality that must be carried out.
• Second, the documents that were originally lost are created. These new documents are linked with the old documents.

The linking is explained as when the old documents or any of the documents get lost, they are furnished with new stamps, compulsory letterheads, new requirement markings, new rules and laws printed, and new style; all of which is made according to the current policies of KDA.

KDA was once part of the Karachi Water Sewerage Board. Even then documents may be from the older era where KWSB didn’t exist. All of which is now created a-new and linked with the relevant old framework of previous documents. 

• Third, a relevant challan is created. This challan has to be paid out. Also, a relevant ticket is produced for this procedure. 

Final Procedures - Forms, Chalan fees, and Authority 

The payment of challan fees can vary from thousands to Lakhs depending on the size of the property and the nature of lost documents. 

The Form that you should know of is a 7B Form. This form is yellow in color and must be filled out completely.

The final step is authority signature. The Forms are signed and stamped by all the relevant directors and district grade officers. This process takes days, weeks, and even months to get done. As per Syed Saad: 

“Depending on the district land size verification process from other authorities, some properties take more time than necessary. The procedures get slower, yet officers try their best to ensure the property is dealt with care and caution. Once the process gets digitized, the process will get faster and free from hindering delays''

Nominee Papers

In case of not being physically present or not being physically capable of doing signatures or writing the forms. The affected person or overseas Pakistani can nominate the other person (relative preferably) to perform the signatures on his/her behalf. 

This keeps the process working with the nominee acting in the favor of the affected. Then the nominee form can be filled by both the lessor (buyer) and the lessee (Seller). 

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Other Forms

KDA has other forms, which are subject to a different blog. KDA has eight different forms dealing with property-related issues:

• Application Form 0: For issuance of allotment order
• Application Form 1: For pre-lease transfer by joint declaration
• Application Form 2: For mutation by registered sale deed
• Application Form 3: For transfer of property by gift
• Application Form 4: For mutation by inheritance
• Application Form 5: For the execution of the lease deed
• Application Form 6: For permission of mortgage
• Application Form 7: Certified true copies of documents

Conclusion

The KDA lease process is not something that you should be worrying about. Investing and buying process takes time but with correct guidance, one can take the right steps and move forward.