NEWS

Developers in Maharashtra seek more clarity on title insurance

June 3, 2019

Mumbai

Title insurance for projects registered under the Maharashtra Real Estate Regulatory Authority (MahaRERA) is yet to take off with developers seeking more clarity on the benefits to consumers and seeking reduction in premium charges.

While the Real Estate Regulation and Development Act 2016 (RERA) mandates the purchase of title insurance for all new and ongoing property projects registered with the regulatory body, the concept of title insurance, aimed at protecting promoters and customers of real estate projects against several risks, has failed to take off in the state.

"We have voiced our concern several times over the high premium and demanded that insurance be done on land cost or construction cost rather than on project cost," said CREDAI vice-president (national) Shantilal Kataria.

While there are many approved products of main insurers, there has hardly been any transaction with respect to title insurance, stated industry officials. Recently, one of the insurers said that they had done only two deals in Mumbai.

Settlement commissioner S Chockolingam, who has been keenly pursuing the land title bill, told TOI that while people take life insurance seriously, they are not mature enough to handle property title insurance.

"It is time both the market and customers evolve and the slow pace can be attributed to teething troubles. Once the land title act comes into effect, either the government or the insurer can provide title insurance," said Chockolingam.

Insurance company representatives feel that even as they are keen on title insurance for housing, they would have to decide on the premium. Title insurance, which is common in the US, is a form of indemnity insurance, which insures builders and customers against financial loss from defects in title and from the invalidity or unenforceability of mortgage loans.

MahaRERA officials added that a title insurance provides security to new buyers against any loss from defects in the property title.

The state government is in the process of enacting Land Titling Bill and may consider notifying the mandatory feature of title insurance, another official added. Once, the state government makes it mandatory, the state real estate regulatory body can enforce it among the promoters of real estate projects "The premiums for such products seem to be expensive and ultimately have to be recovered from the buyers. This could push up the final cost of property," warned another developer.

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Source: content.magicbricks.com