What’s the biggest scare if you are buying or investing in a property? Forty-year-old Raghav’s long-time dream was to buy a site and build his dream house. He was scouting for a good property and finally he found one for which he paid the advance amount to the seller and on an auspicious day he registered the property by paying the balance amount; the deal was settled in full and final. Raghav became the owner of the plot. Did he? Let’s see.
A few weeks later his family decided to start the construction and were just digging for the foundation when a couple of people came to the spot and said the property belonged to them. Raghav was stunned and brought the papers from his house and showed it to them, but much to his chagrin the other party too showed similar document. Now, how can there be two owners to a single property?
Obviously, the seller had duped both the parties, perhaps, taking advantage of the ill-maintenance of records at the registrar office. There are several cases like Raghav across the country, in certain pockets, where a single property has more than one owner. Unsuspecting people get deceived and start a long, laborious and unpleasant legal battle. Such problems may occur at later stages of construction too which could put not only the buyer in trouble but also the lender/home finance company which would have given a loan without knowing that such title-related problem existed.
The solution for such problems is to insure properties under a concept called Title Insurance. Of course, the introduction is yet to happen in India though this is common in countries like the U.S. and the U.K. where an insurance company indemnifies the buyer and also the lender against any issues that could arise out of title of a property.
Under Title Insurance concept, the ownership of the property is established by the insurance company in tandem with the registering authorities that will ensure that the purchaser stays out of any problem that may arise in future that questions the title as an owner; in case any dispute genuinely arises, the insurance company would compensate the buyer to the extent of payment made, thus safeguarding the buyer. A similar hedge can be done in favour of the lender/lending institution that funded the purchase of the property.
The insurance regulator IRDAI had set up a working group in 2016 to study and suggest the modalities of implementing such a policy. Though this concept sounds good, implementation would be a big challenge considering the skewed data management system in India.
Introducing it would be path-breaking in our country considering the present size of real estate and future growth possibilities. The buyer sentiments would get a boost and also increase fresh investments in this sector.
Going forward the government should push for digitalisation of property records with defined deadlines to complete the work. The task is not improbable but when done it would immensely benefit all the stakeholders.
