CREDAI supports it but with a Caution
The developers’ community in Maharashtra has welcomed the government’s move to introduce Land Title Insurance in the state, however, it has appealed to the government to consider all aspects before making the actual move. CREDAI-Maharashtra president Shantilal Kataria has expressed hope that the companies offering sub-par product and claims services would not create monopolies within the insurance industry domain.
Section 16 of the RERA Act necessitates developers to adopt title insurance, however, it will be mandatory after the regulator of each State notifies it.
Reacting to the move, the CREDAI-Maharashtra has welcomed the scheme through a note and cautioned the government that it could escalate the prices. “Government will take a holistic view and ensure the section is not notified merely because of the availability of land title insurance product in the market but will weigh that the very purpose of the mandate is not lost,” said the statement issued by CREDAI-Maharashtra president Shantilal Kataria.
“RERA is a forward-looking legislation with a very proactive regulatory body, however, the framework for the land titles is still nascent within the country. Government is the keeper of records having a multiplicity of entities handling land records and all of them are working in silos. This is one of the main reasons for genesis for title disputes,” says the statement.
The CREDAI-Maharashtra has pointed out that insurance companies have hurried to the market with title insurance products, which emulate the products available overseas.
However, “In India, the land is not only one of the most litigating and controversial subject but is linked to personal laws and other rights and rituals, hence the land title is not conclusive”, he said.
These current products for title insurance introduced in the market are unable to address that very basic need. The exclusions will render the maximum number of claims rejected. The additional cost burden will severely affect pricing for developers creating affordable homes. For an apartment sold under 15 lakhs, current title Insurance policy adds a cost burden of Rs 40,000 to Rs 1,50,000 per apartment, it said.
The statement concludes that digitization of land, starting from the original owner to the present status of land, including an image of the property and the landowner for identification purposes, will reveal the total area of land owned by a person. Unless the insurance product and its claims process are robust, the primary reason for consumer protection via a title Insurance is entirely lost besides the hard earned money spent on premiums, he warns.