When the new president of the National Real Estate Development Council, G Hari Babu, announced that his big agenda was to push for cleaning up land titles in India and its documentation, I felt that he had bitten off more than he could chew. But his premise that no single agency insures land titles and nobody can guarantee the safety of records brings to the fore an issue that many have been campaigning for. India’s efforts at digitisation of land records have been patchy and not effective enough. It has mostly been the conversion of analogue records to digital format. While that is a good first step, it has a long way to go.
Digital India Land Records Modernization programme (DILRMP) was launched by the government of India in August 2008. While many states have started the process and Karnataka and Maharashtra are among those to have launched land records portals where people can check the records before buying land, the matches to cadastral drawings, the record of the history of transactions and the co-owners of the patta are not documented with any certainty. A co-owner can even be a child today who is eligible to raise objections to the sale when he or she comes of age. A developer from Whitefield in Bengaluru explained how he had a challenge to a land purchased almost a decade earlier because the child inheritor had come of age.
In such a scenario, there is hardly any hope of being able to secure foolproof titles at the time of sale. Banks ask for insurance of the title but as is stated on the site of a leading bank, “Title insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss sustained from defects in a title to a property. The most common type of title insurance is lender's title insurance, which the borrower purchases to protect the lender.” It is mostly the lenders with a deeper understanding of the issue who are protected.
Flaw in the Digitalisation Process
Another major flaw in the Indian system of digitisation of land records is that there is no automatic link of the registration process to land records. This means that when a property is purchased and the name of the new owner is registered on the patta, it does not automatically get updated in the digital records. A no-brainer, one would think.
Naredco has set out to challenge the issue with a proof of concept that would prove the enactability of the process. Who better for this than the students of law? Having tied up with a law institute in Mumbai, the Rs 35 lakh pilot project uses five students and aims to pick up certain titles, do a deep dive into their antecedents and update their records historically up to the present times. The project has also co-opted retired judges and policy experts to suggest ways of making the titles dispute-free and proposed amendments to state and national laws to ensure this.
Indian land records have historically not always been maintained in writing. Kings and rulers have gifted lands, colonial rulers have acquired lands by means legal and illegal. Proper digitisation requires a deep dive into the history of that ownership and resolving contentious issues, even invoking legal assistance. After the pilot project, the organisation hopes to take this and recommendations based on the pilot project to the ministry of housing and urban development, for changes in the digitisation policy itself.
Investors Indifferent
It is significant that it is a builder lobby that has picked up the issue. These members are most impacted as land is a raw material for development. Today land prices in India are at a historic high. This makes the issue so much more contentious. This is the reason that despite having over 140 listed companies, serious stock market investors do not consider these stocks as prime purchases. Even some best property stocks are currently trading at roughly half their IPO value, many times because there is no formal declaration of land values. A lot of cash transactions still take place and when this is a listed company, it can erode the sheen for stock market investors.
Many well-known companies from the consumer durables industry and manufacturing sector, with strong brand value, have entered the property markets as developers. Many of these don’t purchase land directly from the sellers. There is a class of land aggregators who act as intermediaries in the process and enter as joint venture partners. But if the real estate industry is to have a free hand and run as corporatised entities, it is absolutely vital that the land issue is resolved and land titles are cleared. Only then can it function as a completely transparent industry. Considering that it already contributes about 7-8 per cent of the GDP and Knight Frank-Naredco real estate report projected the sector to contribute $5.8 trillion by 2047, some housekeeping for the basic underlying products is definitely a priority today.
E Jayashree Kurup is a writer-researcher in real estate and Director Real Estate & Cities, Wordmeister Editorial Services. Views are personal, and do not represent the stand of this publication.
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