Investment Banker Highlights India’s Most Overlooked Property Scam – The Importance of Title Insurance

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In India’s real estate market, many buyers fall victim to a scam that goes unnoticed until it’s too late. While purchasing property, everything may seem perfect: the documents are clean, the registry is done, and the money is transferred. However, a few months later, buyers are often blindsided by a legal notice claiming they are trespassing or do not own the land they thought they had purchased.

Scam
Scam

According to Sarthak Ahuja, an investment banker with extensive experience in the industry, this scam is not rare. "It’s one of the most common—and most devastating—frauds in Indian real estate," Ahuja explains. The scam typically begins with a seller who has not disclosed critical information, such as a sibling having a share in the property, or hidden dues owed to government departments that the buyer becomes responsible for.

In other cases, disputes may arise over the property’s boundaries, leaving the buyer tangled in legal battles. As a result, the property becomes useless—unusable, unsellable, and non-transferable—trapping the buyer’s hard-earned savings.

The problem often lies in the buyer's overconfidence. They verify the documents, meet the seller, and check ownership details through conveyance deeds, inheritance documents, and utility bills, believing everything is legitimate. However, many buyers neglect to hire a lawyer for a rigorous title check. This oversight can prove costly, especially if the property is located outside the buyer's home city, where banks typically avoid financing land purchases and skip their usual due diligence.

Ahuja points out that this issue can be prevented through Title Insurance. By paying a one-time premium of approximately 0.5% to 1% of the property’s value, buyers can ensure that a thorough title verification is carried out by insurance companies. If any legal issues arise in the future, the insurance will cover both legal costs and any financial loss, saving the buyer from a potentially devastating situation.

This highlights the importance of being extra cautious in property transactions and considering Title Insurance as an essential tool to safeguard against hidden property frauds.

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