Investment Banker Flags 'Most Common' Property Fraud In India—How Home Buyers Can Protect Money

For conservative Indian investors, real estate still remains a go-to option, symbolising tangible wealth creation and long-term financial security. However, regulatory hurdles and lack of transparency drive many people away from this sector. The fear of investing in under-construction projects, and unclear land titles often overshadows the emotional comfort that people seek with real estate investments.

A similar sentiment was recently echoed by investment banker Sarthak Ahuja, who pointed out the various “frauds” that can arise from such a transaction.

In a post on LinkedIn on Thursday, Ahuja explained one of the most common frauds that happen to people during real estate purchases. “You meet the buyer, look at all the documents, verify ownership…and are happy with the documentation...You pay and complete the registry. But, a few months later, you get a legal notice asking to either vacate the property or if it's a piece of vacant land - saying that you do not have clear title or ownership of the land…”

https://www.linkedin.com/posts/casarthakahuja_casarthakahuja-activity-7315998492928180226-EkMW/?utm_source=share&utm_medium=member_desktop&rcm=ACoAAApvY1gBo1tiK23Pd5esZ9BPVNk3o09CNwo

Such incidents can be particularly shocking for first-time investors, especially middle-class buyers, who use their life savings for such purchases. “Now, you're stuck with disputed property, unable to sell, and your money is lost,” he added.

“Many buyers don't hire lawyers for a thorough title check. Banks do this when lending for homes, but they don't check land title, especially if it's outside your city. Such scams are common in land purchases,” the banker explained.

To deal with such incidents, there is now an insurance called "Title Insurance,” Ahuja said. 

Under this, for a one-time premium of 0.5% to 1% of the property value, the insurance company checks the property's title. If any issues arise later, the insurance covers financial losses and legal fees, he further added. The product is aimed at protecting buyers from the financial and legal troubles of property disputes. 

In his post, Ahuja said he was interested to know if someone has tried the product or is aware of this. While some people found the information useful, many argued that India's land records were far too skewed and required urgent attention.

One user suggested that instead of relying on insurance, there should be a greater emphasis on ensuring clear land records. “Dubai's property transactions, managed by the Dubai Land Department, are already on blockchain—paperless, transparent, and with well-defined ownership,” the user noted. “Why not expand this approach, instead of relying on insurance” to fix problems that shouldn't exist in the first place, he added.