If you are paying lakhs of rupees for buying a property, it only makes sense to protect your investment and eliminate any uncertainty with regard to title of land.

The property purchased does not necessarily mean having a clear title. The common problem with newly-built apartments and homes are related to legal ownership of land on which they are built. There may be problems like past ownership claims, liens and fraudulent transactions by a third-party to name a few. Moreover, the government does not guarantee ownership of land but it merely endorses property transactions and earns revenue from them via stamp duty.

Definition

The word ‘title’ is referred to a person(s) who has legal ownership and the right to use a piece of land. A defective title can result in difficulty to establish ownership or impact the exercise of rights over property.

Here ‘Title insurance’ comes in handy. It is a form of indemnity insurance which insures against financial loss from claims in title to a property.

RERA Act

To protect the property buyers, the Real Estate (Regulation and Development) Act, 2016 (RERA) mandates the developer to get title insurance for all projects. The benefit of insurance has to be passed to the buyer at the time of sale.

The developer must provide written affidavit to the buyer stating that the ‘legal title’ to the land contains legitimate documents of ownership.

Benefits

The title insurance policy will be beneficial primarily to real estate developers, property investors and housing finance companies. It is a long-term policy ranging from 5-15 years. It protects property buyers against loss due to problems in land title defects discovered after purchase. This covers title defects caused by frauds like forgery or impersonation.

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