Any residential property, even with all legal safeguards are apparently in place, is ultimately built on land. One cannot automatically assume that this land did not have previous owners. Title insurance ensures that the current owner is safe from past claims and title faults and puts the property firmly in his possession. One should see it as a shield of protection against loss arising from such legal proceedings – a shield that protects the owner as long as he or his heirs remain in ownership.
While insurance of buildings has been compulsory since 2001 as per the State Government’s byelaws, this has not been taken seriously so far. Almost 95% of India’s housing societies are therefore not insured. If and when the Urban Development Ministry finally incorporates title insurance in the Real Estate Management Bill, it will make ownership of built-up and landed property far more credible and secure. This will lead to renewed confidence among buyers and will definitely impact the real estate market favorably.
In the absence of proper title insurance, a property’s current owner can and often does find himself saddled with claims originating from previous owners, unsuspected heirs, old liens and various other unsuspected sources. When a proper bill is passed on title insurance, buyers will be assured that the property under consideration is safe for purchase. He or she will no longer have to depend solely on the developer’s assurances with regards to the title’s legal sanctity.
There will greater comfort levels in buying land and built-up projects. In other words, property transactions will be more transparent and therefore speedier, since even banks will be encouraged to grants loans with fewer misgivings. Developers can only benefit from such a scenario.
The passing of such a bill can also help in attracting more FDI in real estate. There is a greater risk factor involved for outside players when the assurance of protected land and property titles does not exist. There will be increased interest in the sector once we have such a framework in place, and this will doubtlessly reflect on the Government’s standpoint on FDI in Indian real estate.
The author, Badal Yagnik is Managing Director – Chennai & Coimbatore, Jones Lang LaSalle India.
