Bangalore: Karnataka will become the first state in the country to provide a state guarantee to urban property titles, albeit only implicitly, when Mysore district issues the first urban property cards later this month.
They will be issued under the Urban Property Ownership Records (UPOR) project— which surveyed 275,000 properties in the Mysore urban area—that creates a record of the current owner of the property.
Mint’s Shamsheer Yousaf says a new project from the Karnataka government will be the first of its kind to provide some kind of guarantee for property titles in cities
Titling is the formalizing of ownership of property, which allows the owner to commercial leverage it; at present, it does not exist in India. Further, unclear titles often lead to violent conflicts and endless litigation.
While stopping short of guaranteeing title, UPOR attempts to improve on the current system in India, where the government does not guarantee title in any way. All it actually does is witness a property transaction between two parties and certifies that it has collected revenue for the transaction. It is this certificate of registration—which goes by different names in different states, and is called the khata in Karnataka—that passes for property title in India.
Also, the process of buying property in India is fraught primarily because the government stopped maintaining records of property ownership when property taxes became a negligible source of government revenue. Mysore was last surveyed in the 1960s.
The Union government has initiated discussions to create a law on national titling. A revised draft of the national titling Bill, 2010, is being readied by the rural development ministry after receiving public comments.
The government hopes that following the cleaning up of property records, a safer and transparent market for property will emerge. “By making UPOR cards mandatory for property transactions, much of the fraud we see today will become history”, said Rajeev Chawla, secretary, revenue department, who holds charge of the UPOR project.
Buyers will have all the information about a property through the UPOR database before they make any transaction, he adds.
This is also expected to help protect government land, which, as a recent report by the chairman of a government-appointed task force showed, was a serious problem due to the lack of clear property records.
Another anticipated effect is on the pricing of properties based on how “clean” the UPOR records are.
“We expect that properties with clean titles will command a premium in the market”, said Chawla. For properties whose UPOR cards have been issued with caveats—improper conversion of agricultural land, for instance—the government will have to take a policy decision on allowing transactions. If transactions are allowed, these properties will likely factor in this risk in its pricing.
On the other hand, some real estate developers are less sanguine about the project. “Already we have hundreds of problems. Why create another one?” said Balakrishna Hegde, the managing director of Chartered Housing Pvt. Ltd and an executive committee member of the Confederation of Real Estate Developers’ Association of India.
Hegde said it doesn’t really affect the pricing of real estate, except it makes a buyer’s job simpler. Under the present system, buyers typically have to go to a lawyer every time they purchase property in order to make sure there are no ownership problems.
The UPOR project is being undertaken as a public-private partnership (PPP) in which private companies will survey cities. Survey data will be combined with data from state land record departments before the government issues UPOR cards to land owners. The private partners make their money from the sale of these cards, which would effectively be mandatory for anybody wishing to buy or sell the property.
UPOR is currently being implemented in five Karnataka regions—Shimoga, Mangalore, Bellary, Mysore, and Hubli-Dharwad. In these areas, selected PPP vendors, in partnership with the survey and settlement department, are in the process of creating a database of urban properties and linking them to ownership records.
K.V. Rudresha, deputy director of land records, who is overseeing the implementation of the project, says that the department is using sophisticated geographic information system-based mapping systems for demarcating properties. “Property is an extremely sensitive issue, so we have mapped properties with centimetre accuracy”, he says.
After all the properties are mapped, the government will embark on a detailed inquiry process for determining the ownership of each property. B.N. Devaiah, chief executive of Secon Pvt. Ltd, the PPP vendor for Mysore, said that for each of the 275,000 properties in the city, a file will be opened to collect documents from property owners, registration department, development agencies, housing societies, and municipal offices.
A draft property card is then issued, which becomes permanent in 30 days, unless there are objections on the property’s ownership.
While clear property records are the primary goal, the UPOR project is also working with banks to prevent mortgage fraud. Every loan will be linked to the UPOR database, and this way banks can ascertain whether loans are outstanding on these properties, said Rudresha.
“Banks have been extremely enthusiastic about this and have offered to pay the government for verifying property credentials”, he added. Memos have already been issued by Syndicate Bank, Canara Bank and State Bank of Mysore for collating mortgage records and handing it over to the department.
The government is also in talks with the high court to link property disputes to the UPOR database. If the system comes in place, the UPOR database will flag these properties for pending cases during property transactions. Auxiliary services such as SMS notifications on property transactions for owners are also being designed to warn of potential fraud.