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Realty sector needs title insurance

Any residential property, even with all legal safeguards 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 as long the owner or his heirs remain in ownership of the property.

While insurance of buildings has been compulsory since 2001 as per state government bye-laws, this has not been taken seriously so far. Almost 95 per cent of housing societies in the country remain uninsured. It 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 impact the real estate market favourably.

In the absence of proper title insurance, a property's current owner can and often does find himself saddled with claims originating from various quarters: previous owners, their heirs, old liens etc. When a proper bill is passed on title insurance, buyers will be assured that the property under consideration is safe for purchase. A buyer will no longer have to depend solely on the developer's assurances with regards to the title's legal sanctity. Property transactions will be more transparent and speedier, since even banks will be encouraged to grant loans with fewer misgivings.

The enactment of a comprehensive title insurance law can also help in attracting more FDI in real estate for it will mitigate the risk factors to a great extent.

By vayaM CS