Mortgaging Land Privately in Bangladesh: Rehen and Khai-Khalasi Agreements, Rules and Risks

In this guide: What kinds of land mortgage does the law recognise? · Is a rehen on stamp paper valid? · Khai-khalasi on agricultural land: the 7-year rule · What a land mortgage deed should contain · How to redeem the land and get a release · The danger of a sale deed "only as security"

The short answer

Yes, you can mortgage land privately, but only by a registered mortgage deed if the loan is Tk 100 or more (Transfer of Property Act s.59). A rehen written only on stamp paper does not create a mortgage. It may help prove the loan, but it gives the lender no secure right in the land. For agricultural land, the only lawful usufructuary mortgage (khai-khalasi) is a registered one for at most 7 years. When the period ends, the land must go back and the loan is treated as paid off from the crops (SAT Act s.95). Never sign a sale deed as “security”.

What kinds of land mortgage does the law recognise?

A mortgage transfers an interest in land to secure a loan. The Transfer of Property Act 1882, section 58, describes the main kinds. In everyday Bangla they map roughly like this:

Bank loans are different. A bank takes a registered mortgage deed, often with an irrevocable power of attorney to sell. Since 2004 even a deposit-of-title-deeds mortgage to a bank or financial institution must be registered. If the loan is not repaid, the Artha Rin Adalat Ain 2003 lets the bank sell the property after notice, or sue in the Artha Rin Adalat. This guide is mainly about private rehen between individuals.

Is a rehen on stamp paper valid?

Usually not as a mortgage. Section 59 of the Transfer of Property Act says that where the principal is Tk 100 or more, a mortgage can be made only by a registered deed, signed by the owner and attested by two witnesses. The Registration Act also makes such deeds compulsorily registrable. An unregistered one does not affect the land.

For agricultural (raiyati) land the rule is harsher. Section 95 of the State Acquisition and Tenancy Act 1950 says an unregistered usufructuary mortgage is void.

What this means in practice:

• For the lender: the stamp-paper rehen gives no enforceable security. If the owner sells the land, or dies and the heirs refuse, the lender can usually only sue for the money. The paper may help prove that money was lent.
• For the owner: the lender in possession may refuse to leave and claim the land was sold, or keep it for years. Disputes about what was agreed are common, because nothing reliable is on record.
• For a later buyer: an informal rehen does not show up in a search at the sub-registry office, so someone else may be farming land you are buying.

If you want a mortgage, make a proper deed and register it. For other uses of stamp paper see our guide on agreements on stamp paper.

Khai-khalasi on agricultural land: the 7-year rule

For a raiyati (agricultural) holding, section 95 of the SAT Act allows only one kind of usufructuary mortgage: a complete usufructuary mortgage. Its rules are:

• The term cannot exceed 7 years, whatever the document says.
• The lender keeps the crops during the term, and those profits are treated as paying off both the loan and the interest. At the end of the term the debt is gone and the land must return to the owner without further payment.
• The owner may take the land back early by paying a proportionate share of the money for the unexpired years. For example, after 4 years of a 7-year term, roughly 3/7 of the amount is payable.
• It must be registered. A mortgage that breaks these rules is void.

Section 95A closes a common loophole. Where land is “sold” outright with an agreement to sell it back, or handed over for a fixed period in return for money, the law treats the deal as a complete usufructuary mortgage of up to 7 years. This applies whatever the deed calls it.

If the lender will not give the land back after the term, section 95(4) lets the owner apply to the officer named in the Act. That officer can order the land restored and, if needed, evict the lender. Which local office now hears these applications varies, so take advice. A civil suit for possession is the alternative.

What a land mortgage deed should contain

Whether you are the owner or the lender, a written, registered deed protects both sides. It should state:

• full names, fathers’ names, addresses and NID numbers of both parties;
• the land: mouza, JL number, khatian and dag numbers, area and boundaries, matching the latest record and namjari;
• how the owner got the land (deed number and date, or inheritance);
• the amount lent, how it was paid, and the kind of mortgage;
• the term (no more than 7 years for usufructuary mortgage of agricultural land), who takes possession, and who pays land tax during the term;
• interest, if any, and how repayment and early redemption work;
• a promise that the land is not already mortgaged, sold or under a case;
• what happens on repayment: return of possession and documents, and a release deed.

Stamp duty and a registration fee are payable on a mortgage deed. Both are worked out on the amount secured, and the rates differ for mortgages with and without possession. The sub-registry office will calculate the current amount. Before lending, the lender should check title exactly as a buyer would. See checks before buying land.

How to redeem the land and get a release

The owner’s right to redeem is protected by section 60 of the Transfer of Property Act. Once the loan is due, the owner can pay or tender the money and require the lender to:

1. return the mortgage deed and all title documents;
2. give back possession, if the lender was in possession;
3. re-transfer the land, or sign a written acknowledgement that the mortgage is extinguished. Where the mortgage was registered, that release must also be registered.

Pay by bank transfer or against a signed receipt with witnesses, never in cash without proof. If the lender refuses to accept the money, send a written legal notice offering payment. Under the TPA, the money can then be deposited in court.

Do not let the release slide. An unreleased registered mortgage shows up in every search at the sub-registry office and will stop a sale or bank loan later. If the lender has died, the heirs must sign the release. The law gives a long time to sue for redemption, but evidence fades, so act promptly.

The danger of a sale deed "only as security"

A common arrangement goes like this. The borrower signs and registers a saf kobala (outright sale deed) in the lender’s name, and the lender promises orally to return the land when the money is repaid. Legally, a registered sale deed transfers ownership. The lender can then do namjari, sell the land on, or mortgage it to a bank.

• For agricultural land, section 95A of the SAT Act may treat a sale with an agreement to reconvey as a 7-year usufructuary mortgage. But the borrower must prove that agreement.
• If the promise was only oral, it is very hard to prove. The Evidence Act limits oral evidence that contradicts a written deed. It usually takes a civil suit claiming the sale was a sham, and these cases are slow and uncertain.
• If the lender has already sold to a third person, recovering the land becomes harder still.

If you need money against land, use a proper registered mortgage deed. If you have already signed a sale deed as security, get legal advice quickly, before the lender completes namjari or sells. Keep every record of payment and of the agreement.