Title Risk in a Mumbai New Launch: What RERA Makes the Builder Declare, Insure and Compensate

In a Mumbai new launch, the land is the part of the deal a buyer sees least. The sample flat is on display, the tower renderings are on the hoarding, and the payment plan is in the brochure. The title to the plot, and whatever claims or loans sit on it, can be summed up in one line of a sales presentation. Yet a flaw in that title can matter as much to a buyer as any delay in construction.

The Real Estate (Regulation and Development) Act, 2016 has several provisions aimed at exactly this risk. They require the builder to declare its title on oath, contemplate insurance of the title, stop the builder from mortgaging a flat after it is sold, and give the buyer a compensation claim for defective title that the Act says is not time-barred. This guide explains each one and what a buyer can do with it.

The short answer. Section 4(2)(l) requires the promoter, when registering a project, to file a declaration supported by an affidavit stating that it has legal title to the land, and that the land is free from all encumbrances or giving details of them. Section 16(1) says the promoter shall obtain insurances notified by the appropriate Government, including for title of the land and building and for construction. Section 11(4)(h) says that after an agreement for sale, the promoter shall not mortgage or create a charge on that flat. Section 18(2) says the promoter shall compensate allottees for loss due to defective title, and the claim shall not be barred by limitation. The trade-off: these provisions give a buyer remedies after the fact, but none of them is a substitute for checking the title before paying.

What does a builder have to declare about the land?

Title and encumbrances, under affidavit. In the text of the Act published by the Telangana regulator, Section 4(2)(l) requires a declaration, supported by an affidavit signed by the promoter or a person authorised by it, stating, among other things:

first, under sub-clause (A), that it has a legal title to the land on which the development is proposed, along with legally valid documents with authentication of such title, if such land is owned by another person; and second, under sub-clause (B), that the land is free from all encumbrances, or as the case may be, details of the encumbrances on such land, including any rights, title, interest or name of any party in or over such land, along with details.

The phrase "or as the case may be" is important. The Act does not require land to be free of every encumbrance before a project can be registered. It requires the promoter to say either that it is free, or what the encumbrances are. A loan secured on the project land, for example, would be a matter for disclosure under sub-clause (B). The buyer's task is to read what was declared, not to assume there is nothing.

Where can a buyer see these declarations?

On the regulator's website, as part of the project's registration details. Section 11(1) says the promoter, on receiving its login under Section 5, shall create its web page on the Authority's website and enter all details of the proposed project as provided under Section 4(2), in all the fields provided, for public viewing.

Section 4(2)(g) also requires the promoter to file the proforma of the allotment letter, agreement for sale and conveyance deed proposed to be signed with allottees. Between the declaration under Section 4(2)(l) and the proforma conveyance deed, a buyer can see both what title the builder claims and what title it proposes to pass on. Our earlier report on verifying a Mumbai property through the Index II record explains a separate check on registered transactions.

Does RERA require title insurance?

It provides for it, subject to notification. Section 16(1) says the promoter shall obtain all such insurances as may be notified by the appropriate Government, including but not limited to insurance in respect of title of the land and building as a part of the real estate project, and construction of the real estate project.

The words "as may be notified by the appropriate Government" matter. Section 16 sets out the framework, but what insurance a promoter must actually take depends on what the government concerned has notified. A buyer should ask the builder in writing whether any title or construction insurance has been obtained for the project, and for a copy of the policy if one exists, rather than assume.

Where such insurance is in place, the rest of Section 16 explains who benefits. Section 16(2) says the promoter is liable to pay the premium and charges and shall pay them before transferring the insurance to the association of allottees. Section 16(3) says the insurance shall stand transferred to the benefit of the allottee or the association at the time the promoter enters into an agreement for sale with the allottee. Section 16(4) says that on formation of the association, all documents relating to the insurance shall be handed over to it.

Can a builder mortgage a flat after selling it?

Not under the Act. Section 11(4)(h) says the promoter shall, after he executes an agreement for sale for any apartment, plot or building, not mortgage or create a charge on such apartment, plot or building. It adds that if any such mortgage or charge is made or created then, notwithstanding anything contained in any other law, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment.

That gives a buyer with an executed agreement for sale a clear statutory position against any later charge on the same flat. It does not deal with loans the builder took on the project land before the agreement, which is why the encumbrance declaration under Section 4(2)(l)(B) is worth reading closely.

What if the title turns out to be defective?

The buyer has a compensation claim with no limitation bar. Section 18(2) says the promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under the Act, and the claim for compensation under this sub-section shall not be barred by limitation provided under any law for the time being in force.

Compensation under the Act is adjudged by an adjudicating officer. Section 71(1) says that for adjudging compensation under sections 12, 14, 18 and 19, the Authority shall appoint one or more judicial officers who are or have been District Judges as adjudicating officers. Section 72 lists the factors, including the amount of loss caused as a result of the default. So a buyer pursuing a defective title claim should expect to show the loss it caused.

Title also has to pass at the end. Section 17(1) requires the promoter to execute a registered conveyance deed in favour of the allottee along with the undivided proportionate title in the common areas to the association, and hand over the other title documents, within the period under local law, or within three months from the occupancy certificate where no local law applies. Our report on deemed conveyance and land title for Mumbai societies covers what happens when conveyance does not follow.

What should a Mumbai buyer check before booking?

The same steps apply whether you are looking at a launch such as Prestige Horizon Heights in Kasarvadavali, Thane, or any other building.

1. Open the project's page on the regulator's website and read the promoter's Section 4(2)(l) declaration on title and encumbrances.
2. Note every encumbrance disclosed, such as a project loan, and ask the builder how and when it will be released for your flat.
3. Read the proforma conveyance deed filed under Section 4(2)(g) to see what title is proposed to pass to you.
4. Ask in writing whether any title or construction insurance under Section 16 has been obtained, and request a copy of the policy.
5. Have an advocate run an independent title search on the land, since the Act's remedies apply after a loss.
6. Execute and register your agreement for sale: the Section 11(4)(h) bar applies once it is executed, and Section 13(1) requires registration before more than ten per cent is paid.
7. Keep every title document you receive, as Section 18(2) claims for defective title are not barred by limitation.

Frequently asked questions

What must a builder declare about land title under RERA?

Section 4(2)(l) requires a declaration supported by an affidavit stating that the promoter has legal title to the land with authenticated documents, and that the land is free from all encumbrances or, as the case may be, details of the encumbrances. The promoter must enter project details from Section 4(2) on the Authority's website for public viewing.

Is title insurance compulsory for RERA projects?

Section 16(1) says the promoter shall obtain insurances as may be notified by the appropriate Government, including for title of the land and building and for construction. What must be taken depends on that notification. Where insurance exists, Section 16(3) transfers its benefit to the allottee or association when the agreement for sale is signed.

Can the builder take a loan against my flat after I sign the agreement?

Section 11(4)(h) says that after executing an agreement for sale, the promoter shall not mortgage or create a charge on that apartment. If it does, the mortgage or charge shall not affect the right and interest of the allottee who has taken or agreed to take the apartment, notwithstanding any other law.

Is there a time limit to claim compensation for defective title?

No. Section 18(2) of the RERA Act says the promoter shall compensate allottees for loss caused by defective title of the land, and the claim for compensation under that sub-section shall not be barred by limitation provided under any law for the time being in force. Compensation is adjudged by an adjudicating officer.

Last updated 2026-10-26. PropNewz Team.