Tag Archives: real estate

title insurance

IRDAI has vide its circular dated 8th September, 2021 recommended to general insurance companies to consider providing title insurance policies to real estate developers and promoters and also home buyers to mitigate the loss, if any due to bad or defective title to the property.


Title insurance is a form of indemnity insurance that protects a potential owner of a property against financial loss from defects in title to real property. The policy is a retrospective one where the insured is protected against losses arising from the events that occurred prior to the date of issuing the policy.

2.    There are a few Title Insurance products in the Indian marketcurrently. However, considering the requirements of legal protection for promotors in the early stages of development of the project during financial appraisal, registration and approval with RERA authorities and safeguarding the interests of individual buyers after taking over the physical possession of property, there is aneed to expand the current title insurance products suitable to promotors/ developers and retail property buyers.

3.    In order to ensure that the general insurers offer basic Title Insurance covers for legal liabilities of promotors/developers in case of any loss caused to allottees duetodefective title of the property, protection for individual buyers for the purchased units in projects and to facilitate easy marketability of these products, the Authority had constituted a Working Group to suggest, inter alia, product construct and policy wording for two new products in addition to the existing products.

4.    Accordingly, the Working Group hassuggested product structure, coverage and policy wordings for the following products.

(a)  Promoter Legal Expenses (Defence Cost) Policy: This cover will indemnify the insured against legal defence costs only against suits challenging the Title of the project.

(b)  Allottee/Individual Buyer Retail Policy: This cover is designed to indemnify the insured against loss from a defect on title of property. The policy may be opted by the individual buyer and financiers of the property at the time of the possession.

The policy wordings developed by the Working Group for the above products are given in the Annexure.

5.    The main objectives of new Title Insurance products are to provide cover to;

(a)  promoters/developers, preferring to optfor a minimum legal defence cost;

(b)  end usersi.e., allottees/individual buyers/financiersat the time of possession/handing over of the property unit for protection against any legal suits in future.

6.    All general insurers are, therefore,encouraged to file these products as per the procedure required under the extant product filling guidelines. The insurers may also design and filesimilar products, keeping in view the minimum coverage as specified in the given policy wording. The filing of the said product/s may be carried out at the earliest to respond to the requirements ofpromoters/developers and retail property buyers.

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income tax relief for housing


As part of the AatmaNirbhar Bharat Package 3.0 as announced by Hon’ble Finance Minister on 12th November, 2020, certain income tax relief measures were brought in for real-estate developers and home buyers.

Up to 2018, section 43CA of the Income-tax Act, 1961 (‘the Act’) provided for deeming of the stamp duty value (circle rate) as sale consideration for transfer of real-estate inventory in the case the circle rate exceeded the declared consideration. Consequentially, stamp duty value was deemed as purchase consideration in case of buyer under section 56(2)(x) of the Act. 

In order to provide relief to real estate developers and buyers, the Finance Act, 2018, provided a safe harbour of 5%. Accordingly, these deeming provisions triggered only where the difference between the sale/purchase consideration and the circle rate was more than 5%. In order to provide further relief in this matter, Finance Act, 2020 increased this safe harbour from 5% to 10%. Therefore, currently, the circle rate is deemed to be the sale/purchase consideration for real estate developers and buyers only where the variation between the agreement value and the circle rate is more than 10%.

In order to boost demand in the real-estate sector and to enable the real-estate developers to liquidate their unsold inventory at a rate substantially lower than the circle rate and giving benefit to the home buyers, it has been decided to further increase the safe harbour from 10% to 20% under section 43CA of the Act for the period from 12th November, 2020 to 30th June, 2021 in respect of only primary sale of residential units of value up to Rs. 2 crore. Consequential relief by increasing the safe harbour from 10% to 20% shall also be allowed to buyers of these residential units under section 56(2)(x) of the Act for the said period. Therefore, for these transactions, circle rate shall be deemed as sale/purchase consideration only if the variation between the agreement value and the circle rate is more than 20%.

Legislative amendments in this regard shall be proposed in due course.

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Last Man in Tower

Aravind Adiga’s “Last Man in Tower” is a story about desperate people – desperate lower middle class people wanting to go up in society, wanting the riches, dreaming of a rich future and to achieve that they will throw all the scruples to the wind. Its a story of a old middle class metropolitan housing society in a suburb of Mumbai. The building is old, needs urgent repairs, the residents are all middle class with aspirations for more. In comes a corrupt, wealthy, ruthless builder who offers more than the market price for each flat in the society. Everybody agrees but for a couple of residents – old couple Pintos whose children are abroad and a widower Masterji a retired teacher whose only son is residing in a posh swanky flat in South Mumbai. He is a principled man with lots of attachment to the flat because of his late wife and daughter. He digs his heels in and refuses to accept the lucrative offer, the other residents get desperate because of the impending deadline, while the builder is sweating because of the potential loss of his reputation, when other builders are ready to pounce upon the property. The book is too long, but the narrative is quite brilliant. Aravind Adiga has written beautifully, his prose is superb. Towards the later part of the book, it starts getting depressing and the ending is a huge anti climax. Reminded me of the 80s movie “Mohan Joshi Haazir Ho” a sort of similar story about house owners who are unable to vacate their tenants and the matter goes to courts and stays there for decades, while the lawyers start getting rich, the plaintiffs become poorer and poorer by the day.  

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insolvency for corporate persons

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2020 today.

The Insolvency and Bankruptcy Code, 2016 (Code) envisages appointment of an authorised representative (AR) by the Adjudicating Authority to represent financial creditors in a class, like allottees under a real estate project, in the committee of creditors. For this purpose, the Regulations require the interim resolution professional to offer a choice of three Insolvency Professionals (IP) in the public announcement, and the creditors in a class to choose one of them to act as their authorised representative. The amendment made to the Regulations today provides that the three IPs offered by the interim resolution professional must be from the State or Union Territory, which has the highest number of creditors in the class as per records of the corporate debtor. This will facilitate ease of coordination and communication between the AR and the creditors in the class he represents.

The Regulations currently envisage that the authorised representative shall seek voting instructions from creditors in a class at two stages, namely, (i) before the meeting; and (ii) after circulation of minutes of meeting. The amendment made to the Regulations today provides that the authorised representative shall seek voting instructions only after circulation of minutes of meeting and vote accordingly. He shall, however, circulate the agenda, and may seek preliminary views of creditors in the class before the meeting, to enable him to effectively participate in the meeting.

The Regulations provide that the committee of creditors shall evaluate all compliant resolution plans as per evaluation matrix to identify the best of them and may approve it. The amendment made to the Regulations today provides that after evaluation of all compliant resolution plans as per evaluation matrix, the committee of creditors shall vote on all compliant resolution plans simultaneously. The resolution plan, which receives the highest votes, but not less than sixty-six percent of voting share, shall be considered as approved.

The amendment Regulations are effective from today. These are available at www.mca.gov.in and www.ibbi.gov.in.

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