TITLE INSURANCE SYSTEM

(Advocates, Property advocates in Bangalore, Property lawyers in Bangalore)

Title over the property is the predominant criterion to ascertain the ownership. Before purchasing a property, it is very important to trace the origin of the property, flow of title and the present status in order to conclusively ascertain the valid ownership of a person.For the simple reason that, a defective title causes greater hardship to the Purchaser, who incurs financial loss for having invested his hard earned money over the property which is not marketable.

Application of Laws

The foremost exercise to ascertain the ownership is tracing of the title of the present Owner.This Act warrants knowing about the prevailing Central and State Laws governing such transactions.Apart from this, Legal Knowledge about the Personal Laws pertaining to different communities is also one of the essential per-requisite since the devolution of the property pertaining to different Communities are governed by their own Personal Laws.At times, it would be difficult to conclude as to who are the proper and necessary parties to the conveyance.

Documents Availability

The investigation about the title and ownership begins with scrutiny of available documents.Sometimes, the necessary documents may not be available as the same would have been lost inadvertently and the case may also be that available documents may suffer from certain discrepancies making them defective or incomplete.

Such circumstances make the issue more complicated. In case of the documents being lost, the only remedy is to apply for the certified copy of such document from the concerned Sub-Registrar Office.Encumbrance Certificates, being a public document, can be applied in the concerned Sub-Registrar Office by any one. However, relying on the certified copies of the documents without proper evidence of the original being lost and genuine efforts being made for tracing the same and Encumbrances Certificate, which, sometimes may not reflect all the transactions that would have taken place, would make it very difficult to probe the previous history and ascertain the present status.

Fake Transactions

Nowadays, creation of fraudulent documents is on the rise.Certain people, in connivance with some unscrupulous Government officials,who are familiar with the procedures, involve in creating false documents,records for unlawful gain and with the intention of cheating innocent Purchasers.

It is not surprising to see names of those, who do not acquire or derive any kind of right over the land, would be mutated in the concerned revenue records and Khatha being issued in their names.Taxes are also being collected by the concerned authority,which will adversely affect the Rights of the original Owner and any subsequent sale in favor of the innocent Purchaser does not convey or confer any kind of right over the property.

In such a situation, title report prepared by an Advocate after identifying the genuineness of such documents with due diligence will help the Purchaser in averting any act of fraud. However, it will not always be possible for all the Advocates to identify the defective or fraudulent documents.Gullible people, who dream of owning a roof over their heads, are the victims of these pernicious transactions.More often the Purchasers do not approach the Advocates for guidance and they are invariably misguided by the hype given for sale of such properties. Unfortunately, the value of the property is determined more by the type of constructions than by the title the Seller possesses.

The demolition drive conducted by the Bangalore Development Authority itself substantiates the presence of certain elements whose main domain is to create false documents and cheat innocent Purchasers.The Purchaser invests substantial hard earned money in such a property which does not have marketable title and settles for nap only to be woken up by the thundering sounds of approaching bulldozer at the doorstep.Adding to the misery of such Purchaser,the original.Owner tries to interfere with the possession in defending the title over such property,leaving the Purchaser in the lurch of unwanted litigations.

 

Title Insurance:

It is under this scenario, the concept of Title Insurance actually evolved, which is very popular in certain foreign countries.Title insurance is a contract between the Insurance Company and Insured.The Purchasers of the property generally obtain Title Insurance cover. The insurance company, on payment of premium guarantees the title of a particular property to a particular person on certain date. The insurance company also compensates the insured for any financial loss incurred on account of defective title of such a property.

Under the concept of Title Insurance, the title guarantee provided is in the form of indemnity guarantee. The Insurer guarantees the title of a particular immovable property for certain date which is apparent in the records. However, guarantee on the title is given only after thorough investigation about the title. This guarantee is subject to conditions like free from defects, no subsisting encumbrance and liens as described in the title guarantee, which will suffice the Insured against the fear of entangling with the property having defective title.

In other Countries, unlike in India, documents pertaining to the property are maintained by the Government Departments in a very systematic and transparent manner without giving any scope for middlemen to meddle and manipulate the documents.The Insurance Company indemnifies the insured for any loss suffered on account of any defects which exists as on the date of insurance. The insurance companies defend the title at their own cost against any defects found to exist on the date of policy.This serves as a shield/protection against any defects that are not traced while tracing the title.

Defective titles

The defective titles are of many types. A few examples:

a)Transactions based on forged documents like Sale Deed, Mortgage Deed, etc.
Documents executed by impersonation.

b)Untraced legal heirs/undisclosed legal heirs not being made parties to the transactions.

c) Revoked Power of Attorney, void Power of Attorney by the death of the Donor.

d)Pending proceedings in Foreign Countries involving bankruptcy, divorce, probate etc.

e) Documents executed by minors, lunatics, insane persons, who do not disclose their disability while executing the documents.

f) Documents executed by mistake, like cancellation of mortgage, etc.

g) Documents executed in violation of Laws.

h) Documents executed by Guardians on behalf of minors in violation of statutes.

i) Transactions by Kartha on behalf of HUF which are not necessary for legitimate needs of the family.

j)Sale of Properties during lispendens.

The concept of Title insurance is, indeed, not available in India.This facility is offered by many Insurance Companies in Western Countries such as America and Australia.Availing such insurance against defective title is normally reflected in records. Since the concept of Title Insurance is not available in India, the title report remains the only authenticated document to rely on, before assessing the marketability and transferability of the property and the Buyer is required to be extra cautious to ensure the perfect title to avoid risks of defective title. However, the need for title insurance is very much felt in India with the increasing instances of fraudulent transactions.

The scope and potential for title insurance is abundant.The onus lies on the Government to take initiative for introduction and implementation of such a policy in India in order to discourage and avoid illegal activities of creating documents with a motive for cheating public for unlawful gains.

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