The government of Karnataka has taken a step in the right direction by announcing the integration of the stamp registration system with the database of properties under urban local bodies. The objective: on the spot verification of ownership before the registration of sale deeds to conclude property transactions.
Over the years, there has been significant integration of information on income sources to help keep a tab on the incomes of tax payers. All incomes subjected to TDS are automatically reflected in your tax filings and this makes the task of filing returns easier for genuine tax payers and tougher for evaders. Interest on fixed deposits or remittances from entities required to deduct tax at source haven’t been able to escape the taxman’s gaze either. Similarly, with the advent of CIBIL, no loan, credit card outstanding balance or deficiency in servicing an obligation goes undetected. This has made the evaluation of prospective proposals a whole lot easier for lenders.
But alas, the hapless property buyer has always had to contend with the possibility of fake or forged documents like tax receipts and sale deeds. Verification of such documents is a tedious process and transactions are largely based on trust. In such a scenario, a buyer usually takes a judgement call on the trustworthiness of the seller. Home loan financiers also safeguard their interest by putting the onus of servicing and repaying the loan entirely on the borrower, using the property mortgage only as an additional assurance. In such a scenario, the only loser if a deal turns out to be fraudulent is the buyer, who may not get possession of the property and is also unlikely to be let off the hook by the lender.
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This leads one to question why, like in the case of any other asset class, the records cannot be completely digitised and made transparent? An individual should be able to easily verify ownership of a property and a sale/transfer should result in the immediate change of ownership in the government’s records. The values of deals will be easily captured and the outliers (those with significant cash component) will become easy to identify. This will exert pressure on buyers and sellers to increase transparency in reporting transaction values and benefit the state in terms of higher stamp duty. Individuals and lenders will transact more confidently and frequently if they feel secure, and this will also improve liquidity and returns. The case for the integration of realty records and open access of such information is therefore quite compelling. Karnataka has taken a great first step towards achieving this, but more needs to be done to create an aura of security around property transactions.