Rajasthan Land Titling Law To Ease Land Acquisition

By Vinay Betala, Associate Director, India Ratings & Research

The Rajasthan Urban Land (Certification of Titles) Act, 2016, passed by the Rajasthan Legislative Assembly this month, will significantly smoothen the land acquisition process in urban areas, says India Ratings and Research (Ind-Ra). Rajasthan is the first state in India 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.

Ind-Ra believes that 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.
The Act provides for the State Government to stand as a guarantor for the permanent certificate of title issued for urban land by the Certification Authority after perusal of documents. The Act also provides for compensation to any person who enters in to a transaction on the basis of a permanent certificate of title, in case the title later turns out to be defective. These provisions will lead to clarity in land titles and will reduce legal challenges, thus reducing the effective cost of land and shortening execution timelines.

The Act is a marked improvement over the current situation where the land title is authenticated based on a series of documents of successive transfers, without any guarantee of the actual title and the buyer’s investment is exposed to the risk of complete loss, in case the title later turns out to be defective. Given the uncertainty as to land title, buyers go through a long process to authenticate the titles, but often end up facing legal challenges, thus delaying the execution of projects and locking up capital.

This titling reform by Rajasthan comes at a time when the government has embarked on a mission to push for urbanisation with various schemes namely, development of smart cities, the Atal Mission for Rejuvenation and Urban Transformation and housing for all.

Under the 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.

About the Author

Vinay Betala