Vijay Kumar Gaba: Land Titling Act

Thursday, February 24, 2022

No black ink on hands

The stock market participants, who invested or traded in stocks in the 1980s and 1990s would remember how tedious it was to buy stocks and get the ownership transferred in their own name. “Bad delivery” and “lost dividends” were such a big nuisance. Then dematerialization of securities was implemented and things changed forever. Research has shown that investors of that era still consider “dematerialization” as the single most important reform in financial markets.

Many of the market participants who started to participate in markets after 2000 even might not be aware that people holding securities in dematerialized form are technically not the legal owners of such securities. They are only beneficial owners of securities– implying that they have the legal right to receive all benefits accruing in respect of those securities. This beneficial ownership is freely transferable, subject to regulatory lock-in and other legal restrictions. The legal ownership of the dematerialized securities remains with the depository institution (NSDL or CSDL) where these securities are held. The rights of beneficial owners are absolute. The securities you receive in your depository account are free from any dispute or deficiency.

Now imagine if we could hold land and properties in a dematerialized form the same manner as you hold securities in your depository account. You would not be required to pay lawyers to verify the titles before buying. You would not need to visit the registrar’s office and dirty your fingers with black ink, every time you want to buy, sell or otherwise transfer your property. No need for mutation of title in local authority’s records. No one can make duplicate title deeds and sell your property without your knowledge. No more expensive and protracted litigation (which drags for decades in numerous cases) to prove your rightful ownership. One day processing of loans against property, with any processing charge, would be possible.

The proposed land titling legislation aims to ultimately achieve these objectives. The new law proposes to replace the existing system of “presumptive ownership” to “conclusive ownership” of property titles. Under the proposed system, the government will grant a conclusive title to the owners, free from all inaccuracies and disputes. Any person who wishes to dispute the title granted by the government will have to settle the dispute with the government. In case the disputant successfully proves his rights the government will compensate him, without any recourse to the title holder.

Once conclusive titling is in place, investors who want to purchase land for business activities will be able to do so without bothering about any future dispute to their title. Presently, because land titles are based on transactions, people have to keep the entire chain of transaction records, and a dispute on any link in that chain results in a challenge to the ownership title.

Conclusive titling will also accelerate the process of land acquisition for development projects, alleviating the unnecessary delays caused due to ownership ambiguities. Evasion of stamp duty and money laundering using real estate will also be minimized as benami holding of properties will get mostly eliminated and irregular/unregistered transactions would become extinct.

The key features of the proposed legislation, to be implemented by each state and union territory separately would be as follows:

· A land titling authority (LTA) will be established in all states and union territories. The authority will appoint title registration officers (TRO) who will prepare a draft list of all properties (clearly demarcated and identified by a unique property ID) in the states and their title owners as per the current records.

· All title ownerships will be given sufficient time to file their claims, corrections, disputes and objections with the TRO.

· The authority will also appoint a Land Dispute Resolution Officer (LDRO). TRO will transfer all disputes received by it to the LDRO. The LDRO will settle all disputes, except the disputes that are sub-judice, and publish the final list or Record of Title (RoT). The entries in Record of Titles so notified shall be conclusive after expiry of three years from the date of such notification as and if modified by an order of the Land Dispute Resolution Officer or Land Titling Appellate Tribunal or the High Court or any other competent authority. Such entries shall be conclusive proof, as defined under Indian Evidence Act, 1872, of such Titles in respect of such Immovable Properties.

· A Land Titling Appellate Tribunal shall be constituted to hear appeals against the LDRO orders.

· A special bench of respective high courts will be established to deal with appeals against the orders passed by the Land Titling Appellate Tribunal.

· To make a transaction in the properties recorded in RoT, the title holders will have to make an application to TRO, who after satisfying himself about the genuineness of the transacting parties shall register the transaction.

· The LTA will notify a date after which all rights or interests relating to Immovable Property in any or all of the Notified Areas shall be executed only in the electronic format in the manner prescribed.

Why is the Land Titling Bill is not in headlines?

Wednesday, February 23, 2022

Why is the Land Titling Bill is not in headlines?

The Union Cabinet of the UPA government headed by Dr. Manmohan Singh had approved the draft of “The Land Titling Bill, 2010”. This was supposed to be a model law to be adopted by all states and union territories. The objective of the proposed legislation was, inter alia, to provide for a uniform law across the country “for the establishment, administration and management of a system of conclusive property titles with title guarantee and indemnification against losses due to inaccuracies in property titles, through registration of immovable properties”.

The Bill was prepared by the Rural Development Ministry’s ‘Department of Land Resources’ to bring uniformity across the country and replace the existing deeds system fraught with excessive litigation due to inaccuracies in property records.

It is a well-known fact that the present system for keeping records of property titles and transactions has numerous inadequacies. There are multiple, usually unconnected, agencies involved in the process. The multiplicity of agencies, their inherent inefficiency and varying processes of updation of property records, often lead to inaccuracies in the ultimate records, causing avoidable disputes and litigation.

The Bill was primarily based on the Australian System of 1858 (commonly known as ‘Torren System”), which has been adopted by multiple countries subsequently. Under the Torren System, the government is the keeper of all land and title records, and a land title certificate issued by the designated authority represents proof of full, indefeasible, and valid ownership.

Under the present system of ownership through deeds, all property titles are “presumed titles”. These titles are claimed by people through diverse legally recognizable instruments, which could be inaccurate, fraudulent, incomplete, or inconclusive, giving rise to disputes and litigation.

The Bill however was never presented for approval before the Parliament as most states did not respond favorably.

In November 2019, “the Committee to draft Model Act and rules for states and model regulation for union territories on conclusive land titling”, set up by the NITI Aayog submitted its report. Subsequently, in October 2020, the NITI Aayog circulated the draft of a model Act and rules on conclusive land titling to be adopted by all states and union territories. The proposed bill is apparently based on Maharashtra’s draft land titling Act. The Maharashtra draft is based on the recommendation of the task force that was set up in 2017 under chairmanship of noted agriculture economist T Haque, comprising experts from across the country.

Like 2010, most of the states have “failed” to respond to the draft legislation. However, unlike the case with the 2010 draft Bill, the central government this time has warned the states to reply promptly, otherwise their silence will be treated as affirmation. Obviously, the states do not like this approach of the central government much, and a constitutional crisis may be brewing underneath.

Surprisingly, this issue is mostly missing from the popular narrative. Inarguably, when implemented, this would be one of the most important reforms in post-independence India.

…more on this tomorrow