MahaRERA, insurance firms to decide premium of land title cover policy for developers
Land title insurance will be made mandatory for registered developers in Maharashtra soon. Maharashtra Real Estate Regulatory Authority (MahaRERA) is planning to make land title insurance mandatory in the state
Land title insurance will be made mandatory for registered developers in Maharashtra soon. Maharashtra Real Estate Regulatory Authority (MahaRERA) is planning to make land title insurance mandatory in the state. As per the RERA Act, title insurance is mandatory for the projects. The insurance companies, which do not have title insurance products, have applied to IRDA for title insurance products. The state RERA authorities are also in discussion with Insurance companies to decide premium of title insurance policy.
Issuing land title insurance was made mandatory under Real Estate Regulatory Authority (RERA), but its implementation was delayed in the state because no insurance player in the market was ready to provide such cover for properties.
This title insurance will secure the new buyers from any losses that could arise due to a certain defect in the property title. The implementation of the scheme is under consideration because insurance firms have expressed interest in providing title insurance for the real estate projects. At present, the premium rates for title insurance policy are being discussed with the insurance companies.
Vasant Prabhu, Secretry, MahaRERA told Zee Business, “Title insurance is a part of the act and implementation is must, but insurance companies were not having the product and now companies have come up with title insurance product. Every year Insurance premium could be a big amount, therefore, developer will pay in the beginning and later it would be transferred to Housing Society. Discussion with insurance companies are going on as premium should not be a huge amount.”
Puneet Sahni, Product Head, SBI General Insurance, said, “land titles are not completely digitalized in India & title insurance will make proper search for title. Land title dispute would cover land cost, construction value and litigation cost will be covered in title insurance. Gross development value will decide the premium of the insurance cover."
Benefits of Title Insurance under RERA
The existing insurance products in the market mainly insure the client for future eventualities. But this land title insurance will protect the property buyers against losses arising from problems in the title of the land, surfacing after purchase of the property like past defects, fraud/forgery/impersonation, failure to transfer conveyance, unpaid taxes on the date of taking the cover and documents which were created or executed in an improper way.
The policy also covers legal defence costs, out-of-the-court settlements with competing claimant or court/tribunal verdicts. In addition, it also increases the limit of indemnity in cases where the value of a property appreciates.
With the implementation of this scheme in Maharashtra, real estate developers of other states may also take initiative to implement this land title insurance.