What due diligence practices mitigate fraud or title disputes in emerging markets?

In emerging markets, industrial land transactions often face elevated risks of fraud, encumbrances, and title disputes due to fragmented records, informal landholding patterns, or inconsistent enforcement. To mitigate these risks, investors and developers must adopt rigorous due diligence practices that combine legal, technical, and operational assessments. Below are five critical due diligence practices that help reduce exposure to fraudulent deals and title conflicts:

1. Comprehensive Title Search and Legal Verification

• Conduct a chain of title examination covering at least 30 years (or as required by law), tracing all prior transfers and encumbrances.
  
• Review:
  
  • Registered sale deeds and partition agreements
    
  • Mutation records, 7/12 extracts, and patta/chitta/fard documents
    
  • Any registered wills, lease deeds, or court orders
    
• Engage a reputed local property lawyer or land law specialist to certify title clarity.
  

2. Encumbrance Certificate and Litigation Search

• Obtain an Encumbrance Certificate (EC) from the local sub-registrar office to confirm that the land is free from:
  
  • Mortgages
    
  • Court orders
    
  • Pledged interests
    
• Conduct a litigation search across district courts, revenue tribunals, and land record portals to identify:
  
  • Ongoing or past disputes
    
  • Stay orders
    
  • Family claims or partition suits
    
• Helps detect hidden liabilities that may emerge after an acquisition.

3. Survey, Boundary Demarcation, and Possession Check

• Hire licensed surveyors to physically verify land boundaries, dimensions, and plot location.
  
• Validate GPS-based mapping with government-approved cadastral maps or GIS overlays.
  
• Confirm actual possession on the ground (no encroachments, squatters, or informal users).
  
• Document the site with photographs, videos, and affidavits from neighboring landowners.

4. Public Notice and Title Objection Window

• Publish a public notice in local newspapers (vernacular and English) inviting objections to the proposed transaction.
  
• Maintain a 30-day objection period to detect potential competing claims, heirship issues, or community encumbrances.
  
• A common best practice in emerging markets is to flush out unknown risks before executing the sale deed.

5. Verification of Local Approvals and Seller Credentials

• Ensure that the seller has obtained:
  
  • Change of Land Use (CLU) approvals (if applicable)
    
  • No Objection Certificates (NOCs) from local authorities (e.g., panchayat, planning board)
    
• Confirm the identity, authority, and representation rights of the seller:
  
  • Match PAN, Aadhaar, or company incorporation details.
    
  • Review the power of attorney documents if an agent is acting on behalf.
    
• Helps detect impersonation or unauthorized transactions.