Law of Bhutan - Civil Law - Property Laws

Property Laws

Broadly, Bhutanese law divides property into three types: movable (chattels), immovable (real property), and intellectual. Additionally, Bhutan has codified legislation on specific subtypes of property, such as livestock, and on general property-related transactions, such as security interests.

Bhutanese hypothecs, loans, and pledges of movable and immovable property, including mortgages and secured transactions, are governed according to the Moveable and Immovable Property Act of 1999 and Land Act of 2007. These types of security interest are generally the purview of the Royal Court of Justice. Bhutanese law includes normative definitions and procedures for attachment and perfection of security interests as well as types of security interests, such as purchase money security interests. The law also covers default, foreclosure, deficiency, redemption, and allocation of risk of loss in modern terms. Notably, non-citizens are prohibited from taking a security interest in immovable property without prior government approval. Also notably, Bhutanese law provides for tolling of interest for mortgagees while incarcerated, and extends some redemption rights to family members of the debtor.

The Land Act of 2007 establishes the National Land Commission as the government agency overseeing land ownership and transactions. The Commission is composed of the Secretaries of the Ministries of Agriculture, Works and Human Settlements, Finance, Trade and Industry, and Home and Cultural Affairs, along with some six other representatives from various public and private interest groups. The Commission oversees land transfers, mortgages, easements, and the national land register ("chhazhag sathram" or "thram"). The Commission also issues deeds of land title ("lag thram") and has surveys conducted for registered lands.

Subject to certain limitations, Bhutanese citizens are free to conduct environmentally sound agricultural and commercial activities on the land they own, as well as enter into transactions such as sales and leases. Additionally, the Royal Government is authorized to lease out its reserves for grazing and pasture management ("tsamdro" lands). Land use must generally be licensed by appropriate authorities; for example, commercial agriculture must be licensed by the Ministry of Agriculture. The law imposes a ceiling on land ownership, and provides exemptions for the royal family, government institutions, religious agencies and institutions, and Bhutanese corporations. Because of this ceiling, the law also provides a grace period to dispose of inherited land, or alternatively, intestate succession to the second in line. Under Bhutanese law, all mineral rights are vested in the state, and the Mines and Minerals Management Act and other laws regulate their use and management. Contiguous lots of land under common ownership may be merged only with local government approval. Further limits on land ownership include escheat in the event of intestacy ("tsatong" lands), non-use of land for 3 years, and non-payment of land taxes.

The reigning Druk Gyalpo is empowered to grant kidu, or parcels of land, and may also grant plots for land rehabilitation purposes.

Tenancies and other estates in land less than outright ownership are governed by the Tenancy Act of 2004, and by Land Act of 1979 where incorporated by Tenancy Act. Under these laws, tenancies must be supported by a written lease with definite terms. Tenancies entail several rights and obligations for tenant and landlord, enumerated by statute. These include many rights similar to common law guarantees, such as the tenant's right of "peaceful enjoyment" and duty to refrain from nuisance and dangerous activities. These also include remedies such as lease cancellation and rent abatement for a landlord's breach of warranty of habitability, and eviction for tenant's breach of duty to pay rent over two months. In Bhutan, however, sub-leases are unlawful. Notably, tenancies pass according to a set order upon the death of the leaseholder. Bhutanese law also contains provisions on rents the limit annual increases to 10 percent of the monthly rent. Tenancies are regulated by the Tenancy Authority, an agency of the Ministry of Works and Human Settlement.