how ef­fec­tive is Rera Man­date on ti­tle in­surance

Rera en­vis­ages that the buy­ers of con­structed units must be pro­tected from var­i­ous con­tin­gen­cies and pro­tect­ing them from losses aris­ing out of de­fec­tive ti­tle in­surance is one of them.

Realty Plus - - Contents -

hDFC ERGO, coun­try’s third largest non-life in­surance provider in the pri­vate sec­tor re­cently an­nounced the launch of its ‘Ti­tle In­surance Pol­icy’, that will pro­vide in­dem­nity to prop­erty de­vel­op­ers and the sub­se­quent own­ers of the prop­erty. The in­surance will be against losses and risks re­lated to de­fects in Prop­erty Ti­tle aris­ing out of Third Party chal­lenges not dis­cov­ered prior to the com­mence­ment date of the pol­icy due to;

• The Ti­tle of Prop­erty be­long­ing to some­one other than the In­sured

• De­scrip­tions & Plans in His­toric deeds of the prop­erty be­ing in­ad­e­quate

• His­toric trans­ac­tion be­ing sub­ject to an act of fraud or forgery by a third party that ad­versely af­fects in­sured’s rights over the ti­tle of the prop­erty

• Ti­tle to the Prop­erty be­ing sub­ject to Un­known Bur­dens or Dis­charge of Bur­dens which may have been im­posed in his­toric deeds ex­e­cuted prior to the com­mence­ment date etc.

More­over, de­fense costs / Le­gal costs in­curred are also cov­ered un­der the pol­icy. Also, cer­tain known de­fects in the ti­tle, may also be cov­ered un­der the pol­icy by spe­cific un­der­writ­ing as­sess­ment for an ad­di­tional pre­mium.

Ac­cord­ing to anuj tyagi, ex­ec­u­tive di­rec­tor & chief dis­tri­bu­tion of­fi­cer, Hdfc ergo Gen­eral in­surance com­pany, “Ti­tle in­surance will pro­vide cus­tomers’ the peace of mind from Ti­tle risks re­lated to the land on which the prop­erty rests. It is cru­cial and a must-have, for de­vel­op­ers not only be­cause it is manda­tory but is as an ef­fec­tive risk trans­fer mech­a­nism.”

san­deep shah, Part­ner, n. a. shah as­so­ci­ates llp is of the opin­ion that even though the de­vel­oper with the help of ex­perts in­ves­ti­gat­ing into the ti­tle of the land seller in­clud­ing by car­ry­ing out search in the Regis­trar’s of­fice, pub­li­ca­tion of ad­ver­tise­ment in news­pa­per about po­ten­tial ac­qui­si­tion, en­quiries etc., lit­i­ga­tion sur­round­ing mar­ketable and clear ti­tle is still ram­pant in In­dia. “The land registry records are not com­put­er­ized by all the state gov­ern­ments/ Union ter­ri­tory. Many lit­i­ga­tions are pre­vail­ing in the coun­try due to fraud­u­lent trans­fer of the own­er­ship records, some­times in­ac­cu­rate or mis­placed and de­cay­ing old records also adds to the woes. There are in­stances also where the own­er­ship has been trans­ferred un­der power of at­tor­ney which was not validly given by the owner or where it was used much after the owner had ex­pired.”

Ex­plain­ing the ef­fi­cacy of Ti­tle In­surance for de­vel­op­ers, Harmesh Mad­hyani, Gen­eral Man­ager, tax­tion, Fi­nance & sap – Ra­heja Uni­ver­sal stated, “Sec­tion 16 of the RERA Act en­tails de­vel­op­ers to im­ple­ment ti­tle in­surance. Ti­tle in­surance like any other in­surance poli­cies helps you from unan­tic­i­pated claims. How­ever, the sig­nif­i­cant dis­tinc­tion which is ad­di­tion­ally the fa­vor­able po­si­tion is that ti­tle pro­tec­tion on your prop­erty is a one-time pre­mium; there is no yearly pre­mium to keep the pol­icy in ef­fect. It cov­ers your real es­tate prop­erty as long as you or your heirs re­tain an in­ter­est in the prop­erty. The ti­tle in­surance pol­icy avail­able glob­ally is pri­mar­ily on two cat­e­gories, Owner’s Pol­icy and Lender’s Pol­icy. In In­dia, sec­tion 16 un­der RERA act only speaks about the owner’s pol­icy. This in­di­cates that In­dia is in a nascent stage at de­vel­op­ing in­surance poli­cies for the Real Es­tate sec­tor. “Since RERA im­poses in­def­i­nite li­a­bil­ity on the de­vel­op­ers on ac­count of de­fec­tive ti­tle, the pre­mium will be worth all its money as far as De­vel­op­ers are con­cerned. It is no­table that as of date only one in­surance com­pany has an­nounced the pol­icy fea­tures re­lat­ing to ti­tle in­surance. Un­less all the State reg­u­la­tors no­ti­fies the pro­vi­sions re­lat­ing to ti­tle in­surance i.e mak­ing sec­tion 16 op­er­a­tive, the de­sired ob­jec­tive of safe­guard­ing the buy­ers of prop­erty will not be ful­filled.

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