Taking possession without an OC can lead to legal complications, denial of utilities such as water and electricity, hurdles in availing home loans or reselling the property, and even eviction.
The National Consumer Disputes Redressal Commission (NCDRC) has held Faridabad-based Hamilton Heights liable for deficiency in service and unfair trade practice for handing over possession of a flat without securing the occupancy certificate (OC).
The case underscores the need for buyers to ensure the OC is obtained before taking possession.
What is an occupancy certificate?
An occupancy certificate (OC), issued by the planning authority, confirms that a building complies with approved plans.
In Gurugram, for instance, it is issued by the Department of Town and Country Planning (DTCP) or the Municipal Corporation of Gurugram.
"For homebuyers, it serves as proof that the property is legally habitable," says Pradeep Mishra, chairman and managing director, ORAM Developments.
Taking possession without an OC can lead to legal complications, denial of utilities such as water and electricity, hurdles in availing home loans or reselling the property, and even eviction.
Under the Real Estate (Regulation and Development) Act, 2016 (RERA), it is illegal for builders to deliver possession without an OC.
"A builder must obtain the OC upon completing construction and before handing over possession," says Viren Mehta, director, ElitePro Infra, a Gurugram-based real estate and investment consultant.
To apply for an OC, builders must first obtain a completion certificate. A registered architect's certificate is required.
"For high-rise buildings, clearance from the director of fire services is a precondition for issuance of an OC," says G. Madhusudhana, partner, IndusLaw.
The required infrastructure -- such as water, sewage, and electricity systems -- must be in place. Authorities inspect the site to ensure compliance before issuing the OC.
Why builders delay obtaining OC
Builders often delay or avoid obtaining an OC.
"This could be due to non-compliance with regulations, such as deviations from approved plans or the constructed area exceeding permissible limits," says Madhusudhana.
Financial issues may also play a role.
"Builders may have unpaid external and internal development charges, penalties, or may have to incur costs linked to rectifying deviations from the plan," says Mishra. Ongoing litigation can be another reason.
Pressure tactics used
Builders often put pressure on buyers to take possession without an OC.
"They might impose maintenance or holding charges, offer discounts for early possession, or threaten forfeiture of allotment," says Mishra.
Buyers are sometimes misled into believing that the OC is a mere formality or is delayed due to minor procedural issues.
Refuse possession
Buyers should formally decline possession offered without an OC.
"Refuse the offer formally in writing. The buyer can also terminate the agreement of sale, seek a refund of the advance amount with interest, and claim compensation," says Madhusudhana.
Mishra adds that a legal notice may be sent, and the matter taken up with the state RERA authority.
Remedies for those in possession
Buyers who have already taken possession can still act.
"They can file a complaint with the consumer forum citing deficiency in service," says Mehta.
Courts may order the builder to secure the OC or pay compensation. Approaching the municipal authorities is another option.
In cases of collective grievance, joint legal action is more effective.
"If the builder had promised to provide the OC and the buyer was subsequently forced to take possession without it, the buyer may have grounds to sue the builder. Consult a qualified advocate as the nature of relief that may be sought will depend on the specific facts and circumstances of the case," says Madhusudhana.
- Insist on OC, fire NOC, lift safety certificate, water/sewage NOC, completion certificate, and environmental clearance certificate
- Check for pending property taxes/dues
- Verify RERA compliance online
- Collect title deed, approved layout/floor plans, Khata, and tax-paid receipts
- Ensure builder hands over all original title papers
- Owners' association should also get from builder maintenance contract documents for lifts, DG sets, and other equipment
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Feature Presentation: Aslam Hunani/Rediff.com
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