The Importance of the Occupancy Certificate (OC) in Real Estate

The advent of the Real Estate Regulation Authority (RERA) Act has brought with it a tide of change in the real estate industry. The lethargic approach of due process of paperwork for projects that are under construction has suddenly changed to ensuring that every approval needed for the commencement and successful delivery of a project is now adhered to.

This has brought the consumer’s focus on ensuring that they have also got their own paperwork in order to avoid legal battles or entanglements when it comes to their own personal property. One such document that remains crucial in the chain of ownership if the Occupancy Certificate, or OC.

The OC is a document, which certifies that a building is developed in accordance to the rules and regulations set by the local authorities and national building codes. Consumers that wish to buy or sell a property or intend to occupy a property for self-use must check for the property’s OC.


Who Obtains the OC?

The occupation certificate has to be obtained by the developer of the project. They  (the developer) make an application to the local authority of the region where the project is located. For instance, the BMC is the issuing authority for an OC in Mumbai; they have offices in several areas or ‘Wards’ across the city.

Possession of a project is incomplete without the OC as it ensures residents access to basic amenities from the local authorities such as water, electricity and drainage. There are instances where developers hand over projects with a part OC, depending upon the size of the development and whether the developer intends to sell raw or bare shell apartments.


Protection of the Home Buyers

Since the occupation certificate provides approval from the local authorities for the livability of a project, it is an important document from a buyer’s perspective.

Furthermore, it also gives the building a legal status and preserves the ownership right of the buyer. Therefore, a buyer must extract the certificate from the developer for the respective property, deeming it suitable for possession.

In the event a property is purchased without an OC, the following issues may arise:

• Issues to obtain basic amenities like water & electricity from the Municipal Authority
• Availing loans against the property or resale will prove challenging
• The authorities may impose higher taxes as a penalty
• The building may be declared illegal, leading to eviction
• The building may be demolished if it is declared illegal

One such instance that is now famous is the Campa-Cola case in Mumbai, where residents faced the aforementioned problems.


Documents Needed to Avail an OC

The developer must submit the following documents to make as part of their application for an OC:

• Sanctioned Building Plan
• Commencement Certificate of the Building
• Completion Certificate
• Recent Property Tax Receipt
• No Objection Certificate (NOC) copies from the Airport Authority & Pollution Board

The application for the OC should ideally be made within 30 days of completion of the project. However, projects that have deviated from the building plan or have flouted rules & regulations may not be eligible for an OC.


What if the Developer Refuses to provide an OC?

Should the developer refuse to provide an OC for the project, the buyer has the right to file a suit in court against the developer and make a complaint in the consumer forum. A notice can be issued against the developer requesting for a handover of the document within a month’s time.

Buyers who have purchased projects registered under the Real Estate Regulation Authority (RERA) Act, 2016 can file their complaints on the official website of the authority.  There is a minimum application fee for filing a grievance, however, the amount varies from state to state.

Homebuyers must ensure they receive an original OC from the builder and not a copy.  This will prove critical when applying for home loans or during the resale of the property.


RERA and Occupation Certificate

With the implementation of RERA on the 1st of May 2017, there was initial speculation about which projects would be included or excluded under the Act. The government has ended this speculation by deciding that all ongoing projects (which commenced before 1st May 201&) without an OC are under the ambit of RERA.

However, certain states such as Uttar Pradesh and Haryana have exempted developers from penalties by diluting the norms set by the Central Government. For example, if developers have applied for an OC or have received a partial OC before the act was implemented, they are exempted from the ambit of RERA.

Nevertheless, experts say that developers that are exempted from the ambit of RERA are not free from the responsibility of ensuring the project is completed on time and must be held accountable for the same.