India: Vasundhara Raje wins the ‘title’ on reforms

By: Swati Ramanathan

Date: April 8th 2016

Source: Live Mint

OPINION

The passage of the Rajasthan Urban Land (Certification of Titles) Bill marks the most dramatic event in the history of property rights reforms in the country

Allow me a bit of hyperbole—the occasion demands it. On 4 April, the Rajasthan assembly approved the passage of the Rajasthan Urban Land (Certification of Titles) bill (ULCT). In doing so, Rajasthan became the first state in the country to enact a law on property titles, marking the most dramatic event in the long history of property rights reforms in the country since Independence.

Security of land and property title through a guaranteed system of title certification has been one of India’s long-pending reforms, the absence of which has impeded economic growth, development, social justice and judicial efficiency.

 

What we have in India today is a system of “presumed ownership”. The notion that a “sale deed” is proof of ownership is misplaced. The registration of property at the stamps and registration department merely acknowledges that a transaction has taken place between two parties. It does not verify or guarantee that the seller is indeed the indisputable owner, nor that the buyer is now indisputably the new owner. It does not guarantee the existing nature of rights to the property, or that the property has no existing restrictions on rights, or that it has no existing mortgage or lien on it, no disputes or litigations in court. All that the current process of deed registration does is acknowledge that a transaction has taken place between two parties, and collect a fee for such acknowledgement. In similar fashion,khatha and “tax paid” documents are not indisputable verification of ownership.

 

Around the world, governments have developed different approaches to provide systems of guaranteed title to land and immovable property, many enshrining right to property with constitutional protection. Guaranteed title forms the bedrock upon which are built all land-related policies—acquisition, pooling, taxation, sub-division, inheritance, contracts, etc. Without guaranteed title, it is akin to constructing buildings with no foundation.

 

In India, we continue with a system of “presumed ownership”, where the risk of fraud is entirely the buyer’s and there are no guarantees provided by the state. The rampant spiraling of unresolved disputes clogging the courts is a direct result of the lack of guaranteed title to property.

 

The urban poor, with no access to expensive lawyers and no formal recognition of rights provided by the state, are in a state of constant vulnerability of eviction, with no ability to use their property to access capital, or civic services.

The negative consequences of India’s system of “presumed ownership” versus a system of “guaranteed title” are far-reaching, not only for owners of property but also for the country’s economic growth and development.

 

A central aspect of growth in any market-based economy is land economics, with three pillars of an efficient land management system: first, the formal recognition and record of ownership rights and extent of property; second, an efficient facilitation of guaranteed transactions on property; and third, a transparent, reliable land market valuation. In India while all three pillars exist, they are individually weak and collectively dysfunctional.

 

The consequences are far-reaching. Development of any public infrastructure in the country is invariably delayed due to disputed ownership and boundaries, resulting in high project costs and failure in delivery of project objectives. Most municipal governments, whose primary source of revenue for the city is property taxes, are unable to undertake more than 50% collection on property taxes or development charges, predominantly due to poor records of property ownership.

 

Moving the needle forward

For the past 30 years, governments and policymakers alike—Congress and Bharatiya Janata Party leaders, erstwhile Planning Commissions and the current Reserve Bank of India governor—have all argued that moving to a system of guaranteed title is an urgent need for India. And yet, no state has undertaken title certification so far, intimidated by the challenges of implementation and the fear of political repercussion.

 

The ministry of urban development (MoUD) included title certification as a mandatory reform under the Congress-led Jawaharlal Nehru National Urban Renewal Mission, and undertook serious efforts to develop guidelines to help states with the reform. PLATINUM Guidelines (Partnership for Land Title Implementation in Urban Management), were released by MoUD in 2012—a comprehensive “how-to” manual to help states transition from a system of presumptive ownership, to a system of guaranteed title.

Three states embarked upon title in various forms: Maharashtra, Andhra Pradesh and Rajasthan. Of these, Rajasthan is the only one with a specific focus on title to urban land, recognizing the urgency of rapid urbanization. The government successfully passed an ordinance for guaranteed title in 2008. However, after Vasundhara Raje lost elections in 2008, Ashok Gehlot’s government allowed the ordinance to lapse.

 

Post her victory in the 2013 elections, Raje has stayed the course in pursuing guaranteed land title reform. 4 April marks one major milestone in the long journey of this complex reform.

With the successful passage of the Rajasthan Urban Land Certification of Titles, the state will identify select cities to pilot and streamline the system of ULCT before rolling it out across the state.

 

Five key elements of Rajasthan ULCT 2016

First, obtaining a Land Title Certification (LTC) is optional for the owner. An LTC will be mandatorily required only at the point of conveyance of property located within the notified area. The fee for moving to LTC has been kept at a low 0.05% to incentivise adoption.

 

Over a period of time, market forces will prevail to incentivise all owners to move to LTC. A buyer, when presented a choice of two identical properties—one with a title certificate guaranteeing indisputable right to the buyer and the other, a presumed right until challenged—will unhesitatingly choose the first.

 

Second, a one-time robust system of identification, surveying and mapping of all urban immovable property, as well as documentation of ownership records, is to be undertaken. Subsequent mutations will therefore be mandatorily recorded so that the data on land and ownership stays current.

 

Third, a digital platform—CLEAR (Computerised Land Evaluation and Administration of Records)—will be created to record and manage all documents in the ULCT system.

 

Fourth, an independent LTC Authority is to be constituted, which will be the custodian of Register of survey records, and Register of title certificates issued. It will be the sole authority for transactions on land under the LTC system. The authority will administer a “sinking fund” that is created for the purpose of indemnification for legitimate claims.

 

Fifth, a tribunal is to be established to hear appeals against orders of the authority and adjudicate on them.

 

The passage of the Rajasthan Urban Land Certification of Titles 2016 is an event that deserves national attention and recognition. Hopefully, it will create the trigger effect for other states to follow.

 

Swati Ramanathan is co-founder of Jana Group.She is a leading urban planner and authority on guaranteed land title systems. She was co-convenor of the Platinum committee under MoUD, and is advisor to the chief minister of Rajasthan.

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