As the government has intensified its efforts to provide conclusive title deeds to land owners to keep lands of individuals safe and protect them from encroachments and manipulation, a proposal mooted by the Stamps & Registration Department to provide title deed insurance has come to the fore yet again.
Senior officials of the Stamps & Registration Department favoured introduction of title deed insurance by roping in insurance firms for the purpose.
The insurance company would accordingly indemnify the financial loss from defects in title and thereby, ensuring protection of the interests of parties to the respective property.
Though the proposal was sent to the government on the modalities of the scheme some time ago, no concrete steps had been initiated in this direction so far. But officials are hopeful that the scheme would get a positive response as and when the government seriously examines it.
In vogue abroad
The system is not a new one and similar arrangements exist in the US, Europe and Australia.
As part of it, the insurance agency undertakes the burden of title search -- including deeds, mortgages, court orders, encumbrance and other documents on behalf of the prospective purchaser/lending agency.
Once the records are proved to be in order, it indemnifies the title by registration from subsequent possible risks.
Once insured, the system would provide for greater security and protection to financial interests of the owners or lenders.
“Collection of 0.05% of the value of the land towards insurance premium will make the whole scheme financially viable for the insuring agencies even if the scheme is implemented on optional basis,” Stamps and Registration Deputy Inspector General G. Madhusudan Reddy told The Hindu .
Buyers/lenders in rural areas might not be attracted towards the scheme as the parties generally know each other and there would be higher level of mutual confidence in the deals there.
The scenario is, however, altogether different in the urban areas where the people intent on registration would invariably prefer title insurance as the value of asset in urban areas is much higher than the rural areas.
Minimising litigation
“Insurance companies with their expertise can minimise the litigation which is already lower as compared to the total volume of registrations and they could earn more profits in the process,” he said.
For instance, buyer opting for property worth ₹ 10 lakh would not feel burden of paying an additional ₹ 5,000 in view of the indemnity he gets against the possible risks.
Win-win situation
Moreover, once the title deed insurance scheme is introduced along with the conclusive titles, there will be no need for the government to bear the costs involved in repaying to owners who suffer losses on account of possible financial loss incurred by the buyer/lender in case of defective titles as the insurance companies would bear them.
“This is a win-win situation for the three parties – buyer/lender, insurance companies and the government,” Mr. Reddy said.
