Why Rajasthan’s new titling law for property is great for faster development

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Jaipur | Published: May 7, 2016 12:24:21 PM

In this context, the Rajasthan Urban Land (Certification of Titles) Act, 2016, passed by the Rajasthan Assembly last month, sets the legal framework for granting of legitimate rights to a property owner in that state.

rajasthanIn this context, the Rajasthan Urban Land (Certification of Titles) Act, 2016, passed by the Rajasthan Assembly last month, sets the legal framework for granting of legitimate rights to a property owner in that state.

Across India’s states, the land title that legitimises the rights to a property owner is authenticated based on a series of documents of successive transfers, without any guarantee of the actual title. As a result, the buyer’s investment is exposed to the risk of complete loss, in case the title later turns out to be defective, something that leads to legal challenges that cause delays in the execution of scores of projects and capital getting locked up.

In this context, the Rajasthan Urban Land (Certification of Titles) Act, 2016, passed by the Rajasthan Assembly last month, sets the legal framework for granting of legitimate rights to a property owner in that state. The new urban titling law, coming close on the heels of Rajasthan’s labour law amendments and easing of laws to smoothen land acquisition, sharply improves the ability of property owners in the state to trade the rights over their property legally.

Rajasthan is the first state to enact a law on property titles, where the state will stand as a guarantor for land titles and provide compensation in case of issues of defective title. Effectively, after this legislation, if two people were to get into a transaction and the deal were to be registered upon payment of requisite stamp duty, it is still not considered proof of ownership but merely treated as proof of a transaction having taken place between the two parties. If a third person were to successfully contest the ownership of the property, there is no compensation available for the buyer in lieu of the money invested in the deal. The property titling of the sort enacted by Rajasthan effectively ensures that even if a third person were to successfully challenge the title of a transaction between the two parties, the government will have to ensure compensation for the buyer against the payment made.

According to India-Ratings, a unit of Fitch Ratings, the adoption of similar laws by other states “can meaningfully shorten the time taken for acquisition of urban land for infrastructure creation by public bodies or for real estate development by private players and bring down overall project cost”.

This titling reform by Rajasthan comes at a time when the Centre has embarked on a mission to push for urbanisation with various schemes aimed at the development of smart cities, the Atal Mission for Rejuvenation and Urban Transformation and Housing for All. Rajasthan may well be the first, but efforts towards having a clear titling process has been pursued earlier as well, with the Centre taking some tangible steps in this direction.

In 2008-09, the Government of India implemented a National Land Records Modernisation Programme (NLRMP) as a Centrally-sponsored scheme by merging the two earlier schemes of Computerisation of Land Records (CLR) and Strengthening of Revenue Administration and Updating of Land Records (SRA &ULR). The main objective of NLRMP was to developed a modern, comprehensive and transparent land record management system in the country with the ultimate goal of ushering in the system of conclusive titles with title guarantee.

Taking into account the criticality of modernisation of land record for dispute free title, the NLRMP has been revamped under the Digital India Initiative and will be implemented as a Central sector scheme shortly, government officials involved in the exercise said. The revamped Digital India Land Records Modernization Programme (DILRMP) will build an integrated land information management system.

It is states, though, who have to do the groundwork on setting in place the legislative framework. Technically, in accordance with Entry No. 18 and 45 of List II (State List) of the Schedule 7 under the Constitution, land and related matters including maintenance of land records, survey etc. comes under the purview of states. Therefore, the enactment of legislation on land titling is in the domain of state legislatures.

“Under the (new Rajasthan) Act, the state government will set up an Urban Land Title Certification Authority, which will seek all the documents from the landowners, and will verify it against the records held by the state. The authority will then issue a provisional certificate of title for a period of two years without guarantee and follow it up with a permanent certificate of title to which the government shall stand guarantor,” according to an India Ratings analyst.

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