India property (land) title guarantee

Mint, the new Indian finance newspaper, reports that land title guarantee schemes are being considered in three states: Rajasthan, Andhra Pradesh and Karnataka. This is being done to clean up 'title' issues which often hold up new developments as also lead to numerous court battles. In some cases today, a developer has to secure close to 40 year history of land ownership before he can be sure of the cleanliness of the title. As most of such developed land tends to have been occupied by farmers, there is generally an issue of lack of records and dispute in ownership and possession.

State guarantee of land titles can go a long way in cleaning up this mess. The guarantee is sought to be given by the state directly or indirectly through a land title insurance product offered by a general insurer. Backing this up is the proposed automation of land records (for example in Karnataka) that will make land transactions that much cleaner and efficient.

What does all this mean to you, the retail investor ? It could mean:

• quicker development of projects
• clean and guaranteed titles should you be buying into layouts converted from agricultural use
• higher prices in the short to medium term as developers vie aggressively for the initial tranches of 'guaranteed' land
• higher prices in the short to medium term as foreign and domestic private equity funds get more aggressive in buying the clean land
• overtime, a demat type land record system where you and I can go to the land title office and get as much information on the land as required before doing a deal - similar to the developed world
• greater transparency in pricing of real estate deals with automation.

The direction is definitely good, lets wait and see how well the implementation goes !