Title Insurance under RERA - what promoters and homebuyers must be aware of !
- Wednesday 15th November 2017
- Author: Yash Verma
The Real Estate seems to be partially on the way to the right track, but there are still some sections in the industry which needs to be covered. One of the awaiting concepts is - Title Insurance.
Title Insurance is a security against any loss from defects in Title of the property.
India does not have any kind of structure to record land titles, which is just a usual activity in the majority of the Countries while dealing in land.
The Real Estate Industry of the Country has been on a changing spell ever since the implementation of the Real Estate (Regulation and Development) Act. The real estate developers of the country have adopted the Act with only some enthusiasm whereas; the homebuyers of the country have welcomed the Act with open arms.
The Real Estate seems to be partially on the way to the right track, but there are still some sections in the industry which needs to be covered. One of the awaiting concepts is - Title Insurance. Title Insurance is a security against any loss from defects in Title of the property. In the current scenario, this protects new homebuyers from any kind of flaws in the land title that has been allotted to him by the owner or lender. The most remarkable advantage of Title Insurance is that this not only prevents the rights of the buyers or insurance holder from an event after the insurance, but this will also help in case any loss pertains from the event prior to the issuance of the policy.
India does not have any kind of structure to record land titles, which is just a usual activity in the majority of the Countries while dealing in land. Introducing Title Insurance will prove to be a crucial part of Real Estate in future. This will attract more investors as there will be proper insurance provisions.
Under the RERA Act, the promoter shall obtain all such insurances as may be notified by the appropriate Government title of land, construction of real estate project. The promoter will be liable to pay the premiums and charges in respect of these insurances. The insurance will also be transferred to the next allottee for his benefit at the time of promoter entering the Agreement for Sale. The documents shall also be handed over to the allottee.
In the trial of the passing of the RERA Act in Rajya Sabha, The Union Minister for Urban Development specifically clarified the requirement regarding Title Insurances. He addressed the Rajya Sabha with the following statement: “The Bill now provides an arrangement for insurance of land titles, which did not exist in the past. It is a huge improvement. This will help both buyers and promoters in case of defective land titles. The developers after building the projects used to run away and the owner had to go through all the complications arising later due to defects in the title of the land. For that also, we have now provided insurance. “
Under the Central’s Real Estate (Regulation and Development) Act, it has been mentioned for the benefit of the consumers as follows:
‘The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.’
The insurance regulator - Insurance Regulatory and Development Authority of India (IRDAI) formed a working group in June 2016 to promote and initiate the implementation of Title Insurance in India. It is expected that there will be some progress for the establishment of the concept in India by the end of this year or next year.
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