A scam is developing in Karnataka’s real estate sector and at the heart of the matter is the ‘Khata’, a revenue document used to calculate property taxes and to obtain loans on property.

The trouble with ‘A’ and ‘B’ Khatas
Originally intended to make life easy for property owners, the Khata has turned into a giant headache. As Bengaluru’s boundaries grew, the Khata broke up into 2 types, the ‘A’ Khata and the ‘B’ Khata. The ‘A’ Khata came first and is the official document issued by the BBMP to record ownership of the property for tax purposes. Properties with the ‘A’ Khata document ideally have land converted for use and all layout approvals in place.

However, as Bengaluru’s borders expanded, the number of properties that violated building bye-laws or were built in unauthorized plots increased. The BBMP wanted to tax these properties and so issued the ‘B’ Khatas. These are temporary certificates that would enable the government to levy taxes, which property owners would have to convert to ‘A’ Khatas to avail of benefits like loans. But conversion is not an easy affair or assured.

“Homebuyers can only apply for a Khata once an Occupation Certificate is issued and depending on the pace of construction, a project can take up to 2 years or more to complete. Anyone who wants to get an ‘A’ Khata will have to wait that amount of time, plus the additional 4-5 months it takes for registration before they can get an ‘A’ Khata”, claims BS Nesar, Executive Director at the Concorde Group.

The scam in the making
Developers in the newer areas of Bengaluru are selling ‘B’ Khata properties registered with the Bruhat Bengaluru Mahanagara Palike (BBMP), assuring homebuyers of conversion. This means that the developer may have registered the property for tax payment purposes, but does not mean that the land or properties are legal. As ‘A’ Khata properties are in limited supply, there is always a rush of people waiting to convert their ‘B’ Khatas. This lengthy process has driven many into the hands of agents, who collude with (BBMP) officials to issue fake ‘A’ Khatas.

BBMP data shows that there are over 800 commercial and residential properties in the city that were given fake Khatas. This is serious as it makes the owners of these residences liable for eviction. The owners of these properties may also take loans on these properties with these fake certificates, creating third-party rights on these plots which will be a problem in case they sell their property. Real estate experts say that if the government doesn’t take steps to address this problem immediately, the issue of fake Khatas will be too big to handle in the future.

“Bangalore has been facing substantial issues on this. The city has various investors and JVs who work on property and they have concerns. Bangalore is the highest office space absorber and it seriously affects plans when you have these title and conversion issues. Any delay will add to costs. The Government should consciously address it, simplify the process and eliminate ambiguities”, warns Sanjay Dutt, executive managing director of Cushman and Wakefield

Time for the government to act
Developers, experts and property owners all agree that the only way forward is for the BBMP to take a clear stance on the matter. They need to stop registering ‘B’ Khatas. Experts say that ambiguous situations like these are the reason for the rise in illegalities in real estate in the city. A lot needs to be done to clean up the system, but a simple public directive would do for this case.

Lakshmi Sivadas, Reporter, NDTV