The state housing department is set to make land title insurance mandatory for MahaRERA registered developers, for which insurers are already in talks with the regulatory authority to decide on the premium.
Land title insurance is a form of indemnity cover, which insures builders and customers against financial loss from defects in title to real property, among others. It had earlier failed to take off due to high pricing and lack of clarity, besides discrepancies in the government records.
The Real Estate (Regulation and Development) Act 2016 (RERA) mandates the purchase of title Insurance for new and ongoing realty projects registered with the Maharashtra Real Estate Regulatory Authority (MahaRERA).
“While title insurance is a must for assured titles, it is up to the government to ensure that electronically generated titles are made available so that insurance can be sought for these assured titles. Having said that, the government needs to sort out discrepancies in title records to attract more insurers to tap the sector,” Rajiv Parikh, the president of the state Confederation of Real Estate Development Association of India (Credai), said.
As per sources, insurance companies have already applied to the Insurance Regulatory and Development Authority of India (IRDA) for launching title insurance products. Developers, on the other hand, are expecting the state government to issue a separate notification in this regard.
“While the title insurance cover may start with new projects, the premium should not be too high as the developers would be passing it on to the buyers,” Parikh added.
As per sources, the premium may vary from 0.5-3% of the sum insured for a seven year policy which can be extended further. “Two transactions for the title insurance products have already taken place in Mumbai,” a source said, adding that the state governments are in the process of enacting Land Titling Bill and may consider to notify the mandatory feature of the title insurance too.
State settlement commissioner S Chockalingam, who has been instrumental in mooting for the title insurance, said an assured insurance for the title will help consumers seek the insurance in case of any discrepancy. “Once, the state government makes it mandatory, the state real estate regulatory body can enforce it among promoters of new projects,’’ he added.
Consumers, however, are not too keen for title insurance over fear of rising cost of property. “The government would have to control the premiums,’ a member of a consumer organisation said.