In a number of Indian States, it is difficult to find the original title deed of any particular property. For instance, 90% of property transactions in Maharashtra are not even registered
In a number of Indian property transactions, it is difficult to get clarity on the title to the property as most of the documents concerned with the deals are not traceable. In Maharashtra alone, around 90% of property transactions are not registered. In fact, there is an ongoing case being fought out in the Bombay High Court since 1930 for a huge chunk of agricultural land in Pune due to no clarity on property title, according to an industry expert.
“Property is a State subject and documentation—including the titles—falls under the jurisdiction of the State. The dependability of these records in each State is not uniform. We have inherited systems and procedures from the British. In those days, there were no computers so everything was handwritten. These systems which have been in existence for over 70 years have remained unchanged. We need to computerise land title records,” said Pranay Vakil, chairman of Knight Frank (India) Pvt Ltd.
The title to any property can be claimed by persons in diverse legally recognisable means. The most common and legally efficient way of claiming title over a property is by possessing a sale deed in one’s favour. However, even such a legally-executed document is not immune from competing claims made by others to the title.
“There are court cases going on since the 18th century and 19th century over property titles. Around 95% of high-value property titles are defective,” said Vinod Sampat, a Mumbai-based property advocate.
Earlier, according to Section (41) of the Maharashtra Co-operative Societies Act, it was not necessary to register a property transaction. Most documents after the transaction (residential or commercial) do not reach the registration office for registry.
“Earlier, 90% of property transactions in Maharashtra were not registered. Whenever we sanction some title certificate to a person, we always give it with a rider stating that we have verified the title with the registrar and we have found that papers were not traceable. Most of the documents are untraceable with the registrar. The files are not well-maintained and most pages are missing from the files,” said Vimal Punmiya, chartered accountant and proprietor, Vimal Punmiya and Company (an audit firm).
Section (41) of the Maharashtra Co-operative Societies Act was subsequently overruled in 2001 and Section 53(A) of the Transfer of Property Act now stipulates that it is compulsory to register any property transaction. “In 2001, Section (41) of the Maharashtra Co-operative Societies Act was overruled and according to Section 53 (A), the Transfer of Property Act, it is compulsory to register the transfer of properties,” said Mr Sampat.
However, the State government has a mammoth task on its hands—the computerisation of all land records.
Ergo, insurance companies are not being able to offer ‘title insurance’, which offers protection against financial loss from real-estate transactions arising from defects in the ‘title’ or ‘ownership’ of a particular property. Many private players, like ICICI Lombard General Insurance Co Ltd, National Insurance Co Ltd and HDFC Standard Life Insurance Co, had filed details of their property-title insurance products with the Insurance Regulatory and Development Authority (IRDA). But IRDA has still not approved these schemes as the systems are still not in place (the data is not computerised).
“You need to verify the correct title before buying a property. If you do not have the correct title, it is very difficult to sell your property. Title insurance is very important in India because it will help to attract foreign funds,” said Mr Vakil.