Home Truths. Property deals are getting smart

Nearly all assets — shares, mutual funds, insurance policies — have a digital footprint. Property assets have been lagging far behind when it comes to moving to the digital era. But this is set to change, thanks to the big push from Governments at various levels.

Various State governments are working on implementing digital land records with proof of concepts underway. Soon, you could view land and home ownership records as well as buy and sell online.

Having digital records will help establish ownership clearly and, hence, reduce litigation. Property transactions are rife with legal wrangles due to various reasons. For example, the dimensions of a property may not match what the documents show. Or, there may be multiple people claiming ownership of the property.

Data shows that 80 per cent of cases in courts are about disputes over land titles and fraud pertaining to property. These account for nearly two-third of the total case backlogs currently — an estimated five million.

These long-drawn cases are a loss, not just for individuals, but for the nation as well — about 1.3 per cent of GDP is said to be lost due to unclear land titles, as per a World Bank report.

Digitising land records started in 2008 with the Digital India Land Records Modernisation Program by the Government of India. Digital record will include a map of the land, ownership change information, photo ID and other details required to establish ownership conclusively.

The first step is to compile data — details of a parcel of land, original owner, ownership period, subsequent transaction details such as date and name. The revenue officials survey the land, collect data and a picture of the property and the current owner’s identity. Data is then digitised and compared with manual data to rule out errors.

Given the many threats of data stored online, the system is built using blockchain technology. Data and authentication are distributed across numerous computers and are, hence, considered safer than cloud and other centralised storage solutions.

A blockchain can be thought of as a decentralised digital ledger. Just as physical ledgers store transactions in a chronological order, blockchain keeps track of access and updates, and can detect changes.

Data can be seen by all departments concerned, but can only be updated through due process. For example, the system will ensure that the person who wants to make a change is authorised to do that. The person’s identity is verified and recorded, creating a permanent audit trail.

Digital records are only the first step. The larger impact is on how ownership changes happen. Records maintained on blockchain can be transferred easily through what are known as smart contracts.

These are automated contracts that can be execute after certain conditions are met, without the need for a central authority to approve and certify.

For instance, if you wish to buy a property, you can enter into a contract with a seller. The system will verify if the seller is the owner and is authorised to do the transaction. The contract gets executed after certain requirements — identity proof for buyer and seller, payment of taxes and other dues, validating the price and verifying payment — are met. There may be no need to visit the sub-registrar office or deal with paperwork to complete the transaction.

For one, you can access all the required information online, without having to run around for documents. For example, details such as boundaries, 7/12 extract (the registry maintained by the revenue department) can be viewed, based on the survey number. Safe access to verified users such as banks, agents and buyers will reduce cost of transactions and time delays. For instance, home loan disbursals or loan against property can be disbursed much faster.

Access to sale price, real time, will help ensure that circle rates are set to reflect market rates. Also, benami transactions can be easily detected and prevented, based on the digital money trail and title holding.

Andhra Pradesh and Telangana are in the process of creating digital ledgers for land records. Maharashtra is rolling out a pilot project in Pune and Konkan. Rajasthan passed the Urban Land (Certification of Titles) Bill in 2017. It has created an independent authority to verify and guarantee land titles. West Bengal is in the process of doing a pilot study to enable land registration, transfers and mutations, duty payments, record modifications, verifications and reporting. Karnataka and Gujarat are also working on blockchain technology solutions.

The writer is co-founder, Rana Investment Advisors

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