Rent disputes in Nepal: deposit, eviction and the ward office that decides them

Start at the right door. Section 46 of the Local Government Operation Act 2074 requires every gaunpalika and nagarpalika to have a Judicial Committee constituted under Article 217 of the Constitution. Section 47(1) lists the disputes it may determine outright, and clause (ja) is house rent and house rent facility where the bigo — the amount in claim — is up to twenty-five lakh rupees a year. A monthly rent of twenty thousand rupees is two lakh forty thousand a year. A shop at a lakh a month is twelve lakh a year. On any ordinary tenancy you are nowhere near the ceiling, and the committee, not a court, is the body with jurisdiction.

The distinction between section 47(1) and section 47(2) matters more than anything else on the page. Section 47(1) disputes the committee decides: it hears them, it applies the law, it issues a decision. Section 47(2) disputes it may only resolve through mediation — that list includes unauthorised entry into another person's residence, causing noise pollution or dumping waste so as to affect a neighbour, and other civil matters and offences punishable by up to one year. Section 47(3) allows a party to take a 47(2) matter straight to court instead. House rent sits in the decide-it list, which is why the committee is a real remedy rather than a conversation.

That difference has a practical edge. Where a tenancy argument is really about behaviour — a landlord who lets himself into your rooms, a tenant whose late-night noise has the neighbours complaining — you may be looking at a section 47(2) matter running alongside your rent claim, and the committee can only mediate on that half. Where the argument is about money, occupation or the terms of the tenancy, it is section 47(1) and the committee can rule.

Section 48 governs how the committee acts. The coordinator and members exercise the jurisdiction collectively and a majority view is the decision. Business can proceed with the coordinator and one other member present, and with two members other than the coordinator for everything short of the final decision. If the coordinator's post is vacant, the two remaining members may act unanimously. These are not academic details when a hearing keeps failing to happen because someone is away.

Section 48(5) is the provision to remember if you are the weaker party in a small ward. Where the coordinator or any member has a personal concern or interest in the dispute, or where a party is a relative of theirs, that person cannot take part in hearing and deciding it. Section 48(6) then lets the remaining members act, and if none of them can, the concerned assembly must designate three members to handle that dispute alone. In a ward where the landlord is a known figure, raising this at the outset is legitimate and it is written into the Act.

Two limits are worth knowing before you start. Where the annual claim exceeds twenty-five lakh rupees, the committee has no rent jurisdiction and the matter belongs in the ordinary court system — the Supreme Court's structure runs from seventy-seven district courts up through seven high courts. And where the real dispute is about who owns the building rather than who may occupy it, that is a title question, not a rent question, and no rent forum will settle it for you.

Section 383 of the National Civil Code 2074 defines the relationship broadly, and generously to tenants. Where a person allows someone else to use a house within their right, enjoyment or ownership for a fixed period in return for money, the house is deemed to have been let on rent. The explanation to the section defines house to include a house, a floor of a house, a unit, a room, and the land or appurtenance the house occupies. A single rented kotha with no paperwork is a tenancy in law, with all of Chapter 9 attached to it.

Section 386(1) then sets out what a written agreement must state. The full names and addresses of both parties with citizenship numbers, and passport or identity document for a foreign national. The location of the house and the plot number. The purpose for which it is taken. The date the tenancy starts and how long it runs. The monthly rent, and the time and method of paying it. Who bears the charges for electricity, drinking water, telephone and the like. The house rent tax. Insurance where it is required. The terms for the tenant vacating and for the tenant being removed. Whether the house may be sublet. And any other necessary matters.

Read that list again as a checklist, because it is the most useful thing in the chapter. Every item on it is a fight that happens later. The clause on removing the tenant, the clause on subletting, the clause allocating the electricity and water bills and the clause on rent tax are the four that generate most disputes, and the Code tells you in advance to settle them on paper.

Section 386(2) creates the exception that swallows a great many Nepali tenancies: a written agreement is not required to let a house at a monthly rent of up to twenty thousand rupees. That is why so much of the market runs on a handshake. It does not mean those tenants have no rights — section 383 still makes it a tenancy and Chapter 9 still applies — but it does mean the terms have to be proved rather than produced.

Where an agreement is written, section 386(3) requires the tenant's photograph to be affixed to it, and section 386(4) requires the signatures or thumbprints of both parties and at least two witnesses from each side, with each party keeping one copy. Section 386(5) says the agreement is deemed made only once that process is complete. An unsigned draft on a phone is not an agreement. Section 398 allows the parties to amend the agreement by mutual understanding, but where it was registered under the Code, the amendment has to go through an application to the body that registered it.

Two further duties attach at the start. Section 387 requires the landlord to disclose, at the time of the agreement, any weakness or defect in the construction of the house. Section 388 requires the landlord to prepare a description of the goods present in the house before letting it, and where the tenant is to use those goods, the tenant takes them and gives the landlord a receipt. That inventory is what stops an argument at the end about a missing geyser.

If your tenancy is verbal, build the record now rather than at the point of the dispute. Pay by bank transfer or wallet with a narration naming the month, keep the transfer confirmations, keep the messages in which the rent, the deposit and the notice period were agreed, and note whether the landlord has ever issued anything in writing at all. Section 385 caps a residential tenancy at five years — for commercial letting the agreement governs — and allows the parties to extend by agreement repeatedly after expiry, so a long verbal occupation is a series of extensions rather than a permanent right.

Section 401(1) of the Civil Code is the exhaustive list of situations in which a landlord may remove a tenant from the house. Where the tenant fails to perform the duties in section 390. Where the tenant carries out inside the house any activity that amounts to an offence prohibited by law. Where the landlord himself needs the house. Where people must be removed so the house can be repaired and maintained. Where the house is found, technically or on health grounds, unsuitable for people to live in. Where the rent period has expired. Where the tenant does anything contrary to the agreement or to Chapter 9. And where the situation in section 395(5) — a badly behaved subtenant — arises.

Now the part everyone gets wrong. Section 401(2) requires at least thirty-five days' advance written notice in one case only: where the landlord is removing the tenant because he needs the house himself. The Code does not attach a general thirty-five-day notice to every eviction. A tenancy that has simply run to the end of its term under clause (f), or a removal for breach under clause (a) or (g), is not governed by that notice provision. Knowing which ground is being used therefore decides how much time you actually have, and it is the first question a tenant should ask.

Section 401(3) and (4) are the tenant's protection against a pretextual eviction. Where the landlord has removed a tenant on the ground that he needs the house himself, he may not let it to anyone else for three months without using it. If he does let it within those three months, and the former tenant wants it back, the former tenant has priority. A landlord who evicts you for his own need and advertises the flat a fortnight later has handed you a straightforward complaint.

Section 390 defines the tenant duties whose breach founds an eviction under clause (a): paying the rent to the landlord at the fixed time; treating the rented house as one's own and keeping it clean, cared for, maintained and secure; not doing anything that causes disturbance, harassment or insecurity to other occupants or neighbours; and complying with the other terms of the agreement. Read against section 401(1)(a), non-payment of rent is a removal ground in its own right, and it does not require a court to be established.

Section 402 sets out when the tenancy is treated as ended: the tenant vacates, the landlord removes the tenant, both cancel by mutual agreement, or the rent period expires. Nothing in that list contemplates the landlord changing the lock, removing your belongings, or cutting the power and water while you are still in occupation. Chapter 9 gives a landlord one route to recover possession from a tenant who is present — removal on a listed ground — and one route where the tenant has vanished, which is section 404 and runs through the ward office.

So the answer to "you have a week to leave" is a written reply asking two questions and making one statement. Which ground under section 401(1) is being relied on. Where is the written notice, if the ground is the landlord's own need. And a note that you will treat any interference with the premises, the locks or the utilities as a matter to be raised with the Judicial Committee, since the Code does not put self-help on the landlord's list of remedies.

Landlords should read the same section in reverse. An eviction that names its ground in writing, gives the thirty-five days where thirty-five days are owed, and is documented from the start is one the Judicial Committee can act on quickly. An eviction conducted by pressure and lock-changing invites the tenant to arrive at the ward first, with the better paperwork.

Section 400(1) lets a tenant vacate before the term expires in three situations: where the landlord has not performed his duties under section 389; where the tenant no longer needs the house for the purpose it was taken for; and where the landlord has done something contrary to the agreement or to Chapter 9. Section 400(2) requires at least thirty-five days' written notice to the landlord in the second of those cases — the tenant who simply no longer needs the place — unless the agreement says otherwise. Section 400(3) then allows a landlord, where the tenant leaves without that notice, to deduct the rent for that period from any advance the tenant had given, and to recover it from the tenant where no advance was given.

That reference to an advance is the closest Chapter 9 comes to the deposit. Read the chapter through and the point becomes clear: there is no provision setting a maximum deposit, no provision requiring it to be held separately or to earn interest, and no provision fixing a deadline for returning it. The list of mandatory agreement contents in section 386(1) does not include a deposit clause. It ends with a catch-all for other necessary matters, and a deposit is one of them.

The consequence is that in Nepal the deposit is a creature of your contract, not of the statute. Whatever is written into the agreement about how much is held, what it secures and when it comes back is the rule between you, and where nothing is written the argument runs on evidence of what was actually agreed and paid. This is exactly why the three months' deposit taken in cash with no receipt is so hard to recover — not because the law is against the tenant, but because the law has nothing specific to say and the tenant has nothing specific to show.

What the Code does regulate is the set of deductions a landlord can justify. Section 403(1) requires the tenant, on vacating, to count and hand over the goods in their charge in good order, and to clean or repaint where that was required. Section 403(2) makes the tenant liable for goods lost or damaged, either by replacing them or paying the prevailing value. Section 403(3) then carves out the crucial exception: the tenant is not bound to replace, or pay for, goods that wear out or are destroyed through daily use. Fair wear and tear is not a deduction.

Section 396 adds the other justified deduction. A tenant may not demolish, remove, damage or add to any structure of the house, or otherwise alter it, without the landlord's written approval unless the agreement says otherwise, and section 396(2) entitles the landlord to recover compensation for loss caused by doing so. Unpaid rent, damage beyond wear and tear, missing inventory items and unauthorised structural changes are therefore defensible deductions. A round sum withheld with no itemisation is not.

The practical sequence for recovering a withheld deposit is short. Ask in writing for an itemised statement of what is being deducted and why, with reference to the goods inventory under section 388 if there was one. Give a date. If nothing comes, file the application at the Judicial Committee, because a deposit dispute is a house rent dispute within section 47(1)(ja) of the Local Government Operation Act and sits comfortably under the twenty-five lakh ceiling.

One more provision helps here. Section 392 makes the landlord liable, unless the agreement says otherwise, for the tax and other fees payable under law on the let house, allows the tenant to pay them if the landlord does not pay on time, and then lets the tenant deduct that amount from the rent. Similarly section 394 allows a tenant who has carried out repairs the landlord was contractually bound to do to deduct the billed amount from the rent. Both are statutory set-offs, and both are stronger evidence than a general claim that money is owed.

Section 391 of the Civil Code governs how rent is paid. Where the agreement sets a method and process, that governs. Where it does not, section 391(2) requires the tenant to pay the rent within seven days of each month having elapsed — a default worth knowing, because a landlord who has never fixed a date cannot then insist rent was late on the third. Section 391(3) permits payment by cheque or in cash. And section 391(4) imposes a duty that is honoured almost nowhere: where the landlord takes rent in cash, he must give a receipt to the person paying it.

That receipt duty is not a formality. It is the single provision that decides most Nepali rent disputes, because the party who cannot prove what was paid loses the argument about arrears, about the deposit, and about how long the tenancy has actually run. A tenant with thirty-six months of transfer confirmations is in a completely different position from a tenant with a memory of handing over cash at the gate.

The reason receipts are scarce is tax. Section 57 of the Local Government Operation Act requires the gaunpalika or nagarpalika to levy a rent tax on the rent where any person or institution has let out, wholly or partly, a building, house, shop, garage, godown, shed, hut, factory, land or pond within its area. Kathmandu Metropolitan City and Lalitpur Metropolitan City both list ghar bahal kar among their municipal taxes, and one of the standard ward-office functions under the Act is recommending the assessment of rent tax. Rent income also engages the federal machinery — the Inland Revenue Department publishes a dedicated house rent forms series alongside its income tax forms and its taxpayer portal.

A landlord who is not declaring the rent has a direct incentive not to leave a paper trail, and that is the real explanation for the missing receipt. It is worth naming that dynamic plainly rather than treating the refusal as personal. A tenant is not asking for a favour by asking for a receipt; section 391(4) requires one where rent is paid in cash.

The workaround is to stop paying cash. Bank transfer, connectIPS, or a wallet transfer with the month written into the narration creates a dated record naming both parties and the amount, and it does so without needing the landlord's cooperation. Where cash is genuinely unavoidable, ask for the receipt each month rather than at the end, keep them together, and photograph them.

The municipal record cuts both ways and is often overlooked. Where a landlord has been assessed for and paying rent tax on your unit, that assessment is independent evidence that a tenancy existed, at roughly what rent, over what period. Where the landlord has never declared it, that absence is not your problem to solve — but it does mean the Judicial Committee will be relying on your evidence rather than the municipality's, which raises the value of every transfer confirmation you kept.

Section 394(1) contains the provision most likely to change how you read your own tenancy. Unless the agreement states otherwise, the duty to carry out the necessary repair and maintenance of a let house is the tenant's. That is the statutory default, and it is the reverse of what most tenants assume. If you want the landlord to carry repairs, it has to be written into the agreement — which is precisely why section 386(1) requires the agreement to be written at all above the twenty-thousand-rupee threshold.

Where the agreement does put repairs on the landlord, section 394 sets out the escalation. The tenant must give the landlord written notice in good time. If the landlord still does not repair, the tenant may carry out the repair themselves and deduct the billed amount from the rent. But section 394(5) requires the tenant, unless there is a separate agreement on the point, to prepare a cost estimate and give the landlord written information fifteen days in advance. Skipping that fifteen-day step is how a legitimate deduction turns into an arrears claim.

Section 389 sets the landlord's side. The landlord must let the tenant use the house in accordance with the agreement. Unless the agreement says otherwise, the landlord must arrange, so far as available, the supply of water and electricity and the drainage and sanitation of the let house. The landlord must prevent the tenant suffering insecurity, harassment or disturbance from other persons living in the house. And the landlord must comply with the other terms of the agreement. Failure on any of these is a ground for the tenant to leave early under section 400(1)(a).

Utilities are allocated by section 386(1), which requires the agreement to state the liability for charges for electricity, drinking water, telephone and the like used in the house. Our reading — and this is our characterisation rather than a rule in Chapter 9 — is that this clause is where most shared-meter disputes are lost in advance. The Code allocates liability between landlord and tenant, but the utility itself deals with the connection and the account holder, so an unpaid balance follows the meter into the next tenancy rather than following the departing tenant. Get the meter readings photographed on the day you move in and the day you move out.

Insurance has one specific rule. Section 393(1) requires a tenant who takes a house on rent for industrial or commercial purposes to insure it for the security of the house, and section 393(2) makes that tenant liable if they fail to insure and the house is then damaged by disaster, disturbance, riot or arson. Section 384 sits alongside it: no one may let, or take, a house that is not suitable for human habitation on health and safety grounds, and the standard for non-residential premises such as godowns, cold stores and animal sheds is whatever the rent agreement specifies.

Two further limits govern how a tenant may use the place. Section 397 prohibits using the house for any purpose other than the one it was rented for without the landlord's prior approval — turning a rented flat into a workshop or a guesthouse is a breach. Section 395 permits subletting only where the agreement with the landlord says it is allowed, requires the tenant to give the landlord the subtenant's name and address in writing within fifteen days, and lets the head tenant remove a subtenant who fails to keep the property clean and secure or who harasses other occupants and neighbours.

Finally, section 399 gives the landlord the right to inspect the let house from time to time after giving the tenant advance information, and makes it the tenant's duty to allow the inspection. Advance information is the operative phrase. A right of inspection on notice is not a right of entry at will, and unauthorised entry into another person's residence is separately listed in section 47(2) of the Local Government Operation Act as a matter the Judicial Committee can take up through mediation.

Section 49(1) of the Local Government Operation Act starts the process: the Judicial Committee registers the application put before it and gives the party a registration receipt. Get that receipt and keep it. It is the proof that you filed on a particular date, which matters because of the limitation rules discussed in the next section. The Act's explanation to section 47 confirms that an application for this purpose includes an ujuri or a firad, so the label on your paper does not defeat it.

Section 49(2) requires the committee, so far as possible, to encourage mediation and to bring about a milapatra by the consent of both parties. Where the parties cannot be reconciled, the committee must proceed to hear and decide a section 47(1) dispute according to law — so mediation is the first stage of a rent case, not the whole of it. Section 49(3) requires any mediation to be conducted through a mediator the committee has listed, and sections 49(10) and (11) allow a mediation centre in each ward, with the parties choosing between them where a ward has more than one. Mediators are trained and certified through the Mediation Council, which operates under the Mediation Act 2068 and publishes its approved mediator lists.

Section 49(4) sets the clock on that stage: the committee must resolve the dispute through mediation within three months of both parties appearing. Where mediation fails within that period, a section 47(2) dispute is recorded as unresolved and the file is sent to the court — but a rent dispute is a section 47(1) matter, so it stays with the committee to be decided.

Section 49(9) is the deadline that decides a startling number of these cases by default. Where an application under section 47 has been filed, the respondent must appear before the Judicial Committee with a written response, in person or through a representative, within the myad fixed under the prevailing law, or where no myad is fixed, within fifteen days excluding days of travel. A landlord or tenant who ignores the notice because it came from the ward rather than a court has handed the other side an unanswered case.

Section 49(6) gives the committee real teeth, and it is the provision most useful to a tenant chasing a deposit or a landlord chasing arrears. On the application of the claimant, and after a preliminary enquiry, the committee may write to a bank, company, financial institution or other body to freeze an account, deposit or sum receivable in the respondent's name, or to block the transfer of immovable property in the respondent's enjoyment, for a period it specifies. The body written to must implement the freeze and inform the committee. Section 49(7) lets the respondent apply to have it released.

Build the evidence file before you file, because these hearings turn on documents. Assemble the rent agreement or, where there is none, the proof that a tenancy existed and on what terms. Every payment record with dates. Any receipt issued under section 391(4). The goods inventory under section 388. Photographs of the premises at move-in and move-out, with meter readings. The written notice you gave or received, and the date it was given. Any repair estimate served under section 394(5). Correspondence, including messages, in date order.

After the decision, section 50 requires the committee to give the parties a certified copy of the final decision within thirty-five days of the date it was made. Section 52 requires the executive of the palika to implement a milapatra or a decision of the Judicial Committee immediately, with further arrangements set by local law — so enforcement is a municipal function rather than something you have to bring separate proceedings for. Section 49(12) leaves registration, enquiry, service of myad, securing attendance, the mediation process, the time for deciding and the striking-off of records to local law, which means your own palika's procedural act is worth reading alongside the federal one; Kathmandu and Lalitpur both publish their local acts online.

Section 405 of the Civil Code sets the limitation for the rent chapter: a person aggrieved by any act done under Chapter 9 may file a complaint within six months of the date the act was done. Section 47(4) of the Local Government Operation Act approaches it from the other end — where the prevailing law prescribes a limitation for filing before the body that hears the matter, that limitation applies, and where none is prescribed, the application must be made to the Judicial Committee within thirty-five days of the act. Our reading of the two provisions together is that section 405 is the prescribed limitation for a house rent dispute and the six-month period governs. That is our inference from reading the statutes side by side, not a proposition either document states, and it is a bad thing to be testing at the last minute. File early.

Section 51 gives the appeal. A party not satisfied with a decision of the Judicial Committee may appeal to the concerned District Court within thirty-five days from the date they received information of the decision. Note what the clock runs from: not the hearing, not the decision date, but the day you were told. That is why the certified copy under section 50 matters, and why you should record the date you received it. Nepal has seventy-seven district courts, and an appeal from a rent decision is heard under the ordinary civil procedure, for which the National Civil Procedure Code 2074 is the governing statute.

Section 404 handles the case Chapter 9 treats entirely differently: the tenant who has disappeared. Where a tenant has been missing for three months or more without notice and without paying rent, and cannot be found on public notice or on correspondence to their address — or is found but neither they nor any heir or representative appears — the landlord must apply to the concerned ward office of the local level. The ward office then issues a fifteen-day notice and a public notice calling the tenant to appear.

If the tenant does not appear within that period, section 404(4) lets the ward office have the house vacated, keeping the goods in its own custody or that of a person it designates. Section 404(5) then gives the missing tenant six months: if they return, or send a representative, within six months, the ward office must take the outstanding rent and return the goods. Section 404(6) covers ward-office inaction — if no action has been taken within one month of the application, the landlord applies to the ward office and the nearest police office and, with a police employee and at least two local people as witnesses, prepares a deed, vacates the house and hands the goods into police custody. Being present as a witness to opening a closed house or room is a listed ward-office function under the Local Government Operation Act.

Read section 404 as the boundary of self-help rather than a licence for it. It is a supervised procedure, it involves the ward office and, at the last resort, the police and witnesses, and it applies only to a tenant who has genuinely vanished for three months without paying. It is not authority for opening the room of a tenant who is late with the rent but plainly still living there.

Some rent arguments are not rent disputes at all and should not be filed as one. Assault, threats, theft of belongings and criminal damage are police matters: Nepal Police runs a complaint and grievance channel alongside the 100 control number and the 16600141516 toll-free line. A claim whose annual amount exceeds twenty-five lakh rupees is outside section 47(1)(ja) and belongs in the courts. A dispute about who owns the building is a title dispute. And where a landlord has taken money for a tenancy they never had the right to grant, that is a fraud rather than a tenancy problem.

Where you cannot afford representation, the district courts operate a legal aid scheme and the site's guide to free legal aid in Nepal sets out how to use it. But note the deliberate design of the Judicial Committee route: it sits in the ward, it starts with a written application and a registration receipt, it is required to try mediation first, and it can decide the case at the end. It was built so that people could use it without a lawyer, and the reason it goes unused is not cost — it is that almost nobody renting in Nepal knows it exists.