The state government will declare the land title insurance as compulsory for all MahaRERA registered builders.

By Abhay Shah, Realty Quarter

The State Housing Department is set to make land title insurance compulsory for MahaRERA registered developers, for whom insurers are already discussing the premium with the regulatory authority. Land Title Insurance is a form of indemnity cover that provides builders and customers with insurance against financial losses resulting from defects in property rights, among others. Previously, because of high prices and lack of clarity, it failed to take off, apart from discrepancies in government records.

In the Real Estate (Regulation and Development) Act 2016 (RERA), the new and ongoing property project insurance is mandatory to be obtained from the Maharashtra Real Estate Regulator Authority (MahaRERA).

“There must be title insurance in assured titles but it is the government’s task to make the electronically generated titles available in order to obtain insurance for these assured titles,” says Rajiv Parikh, President of the State Confederation of Real Estate Development Association of India (Credai). “The government has to resolve the gaps in title records so as to attract more insurers to take over the sector,” he adds.

The insurance companies have already applied for the launch of title insurance products to the Insurance Regulatory and Development Authority of India (IRDA). On the other hand, the developers expect a separate notification from the state government. “While the title insurance cover may start with the new projects, the premium shouldn’t be excessive since the developers will pass it to the buyers,” Parikh added. According to sources, the premium for a seven-year policy can vary from 0.5-3% of the total insured.

“Already two transaction in Mumbai have taken place for title insurance products,” The source added that the State Government is in the process of issuing the Land Titling Bill and may consider notifying the compulsory feature of the title insurance as well. The insurance companies are already in transactions for Title insurance products at Mumbai.

S Chockalingam, state settlement commissioner, who has been instrumental in the mooting of the title insurance stated that assured title insurance would help consumers to seek insurance in the event of discrepancies.

“Once, the state government makes it obligatory, it could be enforced among the promoters of new projects by the state real estate regulatory authority.” However, consumers are not too keen to insure titles because they are afraid of rising property costs. A member of a consumer organization said: The government would have to control the premiums.