The trauma of finding oneself at the wrong end of fraudulent transaction is one major reason for lakhs of property lying undeveloped in the country.
The trauma of finding oneself at the wrong end of fraudulent transaction is one major reason for lakhs of property lying undeveloped in the country.
However, title insurance companies who provide this kind of insurance abroad are seeing these lacunae of clear title (land plus developed property) as a business opportunity in India.
Among them is the largest title insurer globally, NYSE-First American Title Insurance Company which is exploring opportunities to provide these services to their clients seeking to invest in the booming Indian real estate market. The company is planning to set up business by the year end.
Says Alison Cooke, CEO of the Hong Kong branch of First American: “We believe there is an enormous demand for title insurance in India. We’re seeing this demand not only from our international investment clients, but also from Indian banks who want to be able to securitise their mortgage portfolios into the international markets.’’
First American writes risk in respect of jurisdictions in S America and Eastern Europe which have similar risk levels as those seen in India.
Real estate experts are keenly watching to how successful would be the venture in India when about 50% of the transactions get delayed due to lack of clear title. “In fact, many a time the purchaser is not even aware of the property being under litigation.
There are internal disputes if the property is inherited. It, thus, becomes difficult to get correct information of a property. The property is either benami or held through power of attorney. How does one insure a title,’’ said M Shah a developer, who ensures he gets land ownership details for the past 20-30 years before purchasing a property.
To which Cooke replied, “In brief, one never knows when or how a title problem will occur, it can be from a known or unknown defect. Title insurance adds a financial indemnity to your lawyer’s opinion, as well as covering for items which the legal opinion does not, such as fraud and forgery.’’
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