Skip to main content

Title insurance to come to the aid of property buyers

A typical property dispute: After buying an old bungalow or asecond- hand property, the buyer ends up in court because aclose relative of the seller claims to be a partial owner. Property ownership disputes, especially among Hindu Undivided Families, are common. But, it is not restricted to HUFs. Many developers in the past faced problems because they sold one flat to several individuals. To provide relief to such buyers, the Insurance Regulatory and Development Authority of India ( Irdai) has set up a committee to launch title insurance.
Popular in the US and Europe, the policy protects an owner’s or lender’s financial interest in property against loss because of title defects and other matters. “ It defends against alawsuit contesting the title, or reimburses the policyholder for the monetary loss incurred, up to the amount of insurance provided by the policy,” says an official of a general insurance company. The official says this will be a product essentially for the retail individual category but will be sold to institutions such as banks and non- banking finance companies.
Real estate consultants say this is much needed. Usually, when a person buys property, either she hires lawyers for a title search or if she is taking a loan, the lender does it. They go through at least 20 years of ownership records and also check if there is any litigation on the property. Some even go to the extent of advertising in newspapers, asking interested parties to stake a claim, if any. “ As land records in India are not digitised, title search is not a fool- proof method. It only minimises the risk associated with the title of a property,” says Surabhi Arora, senior associate director, research, at Colliers International India. She says, it’s very difficult for lawyers to find out if there is any pending litigation on the property outside the city where the property is located.
“The current method is expensive and time consuming. Though courts do favour buyers who have done due- diligence, it can take decades to finally win the case at different courts. Title insurance can further minimise such risks,” says Ashutosh Limaye, head of research & REIS at property advisory firm JLL. He says it can be cheaper for a flat and more expensive for a piece of land. That’s because evaluating a land title is more cumbersome where a lawyer would need to go through multiple government offices and development plans over the years.
Before giving the policy, insurance companies, too, will run a title check. It will go to government offices to get records of the property, like the registrar to know how many times property has been sold, municipal corporations to know the development plan records and collector’s office for land records. They will also go through courts to check registered agreements and if there are litigations.
Internationally, similar checks are done. However, it is less complicated.
Apart from protecting buyers in cases where another person stakes a claim in the property, the product would also cover buyers for any defect in title because of fraud, forgery, failure of authorised transfer; documents executed under falsified, expired or invalid power of attorney and documents not properly recorded, filed or indexed in public records. Once purchased, the buyer will be covered until she retains ownership.
Business Standard New Delhi,17th June 2016

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s