If you are reading this article, most likely you are planning to make an investment in a property sometime soon, and therefore want to be a savvy and an informed buyer. Let us help you in this buying process.
Now, in our previous article, “Sanctions and Approvals required for Different Types of Properties”, we had listed down the different types of Sanctions and Approvals required to construct a building. In this article, we will focus on two of the documents from that list, which are (1) Commencement Certificate and (2) Occupancy Certificate, highlighting:
- Their importance
- The process of obtaining each
- The implications of not having one
Which should help you determine the legality of the property’s construction.
As mentioned in our previous article, a Commencement Certificate is one of the most important documents a builder needs to obtain from the Planning Sanction Authority (like BBMP in Bangalore, BMC in Mumbai, PMC in Pune, DDA in Delhi), prior to the start of any construction project, and it has to be in accordance with the Sanctioned Building Plan that was approved by the authorities.
The typical steps followed by a builder to obtain a Commencement Certificate are:
- Once the Sanctioned Building Plan building plan is approved by the authority, the builder needs to mark the foundation & the columns as per the specifications outlined in that document.
- The builder informs the authorities and requests for an official inspection.
- Upon completion of the inspection, if the authorities find the construction in accordance to the building plan, they issue the permission in the form of a Commencement Certificate. If not, the builder needs to modify the construction plan and request step 2 again, until approval is given.
Typically, a Commencement Certificate is issued on the following conditions:
- The builder needs to strictly abide by the building plan, without any deviation or violation
- The builder needs to facilitate the inspection of the progress of the work
So, what is the implication of a property not having a “Commencement Certificate”? Well, it doesn’t affect you financially – if you have not bought the property yet. This means you can either choose to wait for the eventual issue of the Commencement Certificate or walk away if the builder cannot commit to furnish one, for that particular property. Bottom line, not having a Commencement Certificate primarily impacts the builder’s ability to market that project to an informed buyer such as yourself.
An Occupancy Certificate is a permission granted by the same authority (BBMP in Bangalore for example), that certifies that the building mentioned in the Occupancy Certificate, is fit to be used for the personal occupation.
The typical steps followed by a builder to obtain an Occupancy Certificate are:
- Once all construction work on a building is completed, the builder will initiate a request for inspection by the local Planning Authority (aka the “Inspection Authority”).
- Along with this request, the builder will submit a report to the authority with recommendations to issue an Occupancy Certificate.
- Based on the inputs from the inspection authority, the Planning Approval Authority verifies whether there were any changes made to the original plan. In case, the changes or the deviation is within the permissible limits of 5%, the Planning Authority regularizes those changes upon payment of some fine and thereafter issue an Occupancy Certificate. If the changes are beyond 5%, the onus is on the builder to modify the construction and comply with the Sanctioned Building Plan, without which the Planning Authority will not issue an Occupancy Certificate.
Typically, the general norms that a builder needs to be met before a Planning Authority issues an Occupancy Certificate are:
- The builder should not add/alter the structure without specific permission; in the event of violation, the authority has all the rights to demolish the deviated structure
- It is mandatory to construct toilet facilities for the visitors, drivers, and servants on the ground floor within the plinth area of the building within 3 months from the date of issue of an OC (Occupancy Certificate)
- The basement floor must be used for car parking purposes only as per the sanctioned plan
- If the building scheme requires approval/ NOCs from other statutory bodies like ‘Water & Sewerage scheme’, ‘Transformer cum cable installation’, ‘Lift installations’ etc., then the Planning Sanction Authority shall issue the Occupancy Certificate only after getting the approval/ NOCs from these statutory bodies
- Rainwater harvesting should be implemented and maintained in good working condition for storage of water and recharge of ground water
- The owner shall segregate the waste and make appropriate arrangements to dispose of the organic and inorganic waste
Other than the above, the Planning Authorities of each individual state set their own unique norms; some examples are:
- In Bangalore, the BBMP (Bruhat Bangalore Mahanagara Palike), has published the criteria which is in consonance to the Bye-Law 5.6 of the Bangalore Mahanagara Palike Building Bye-Laws 2003 (Bangalore Bye-Laws). To know more click here- http://bbmp.gov.in/documents/10180/508731/Occupancy+Certificate.pdf/7594b496-bf6d-4cfe-b0b1-b6a96e320991
- In Hyderabad, an Occupancy Certificate is mandatory for all buildings, except for individual buildings in plots up to 100 square meters and a height of up to 7 meters. Refer to Andhra Pradesh Building Rules, 2012 for more information
- In Delhi, the Unified Building Bye Laws for Delhi, 2016 are applicable to the Delhi Development Authority, which says that the occupancy certificate has to be obtained for all residential buildings i.e. one or two or multi-family dwellings, lodging or rooming houses, dormitories/hostels, apartment houses and flats and hotels. In Delhi, the document is referred to as the “Completion cum Occupancy Certificate”
Let’s also quickly understand the consequences of not having an Occupancy Certificate. Since, this certificate is issued after the entire construction is done, this implies that, you as a customer would have already paid a majority of the payment to the builder by this time. Hence, it is crucial that you insist on having a clause in your legal agreement with the builder at the time of signing, that the builder must provide you with an Occupancy Certificate for your property; as the consequence of not having this certificate is severe, as outlined below-
- It is illegal to occupy or take possession(ownership) of an apartment/building unless the occupancy certificate is obtained. Hefty penalties can be imposed in such cases
- Financial Institutions (like banks) will be reluctant to give loans for such properties
- The Municipal Corporations refuse to register such properties in their revenue records (such as Khatha/Mutation Extracts)
- Resale of such properties is a big challenge
- Difficulty in obtaining water and sanitary connection in your name
Now, that you know the importance of a Commencement Certificate and an Occupancy Certificate, don’t forget to insist on these two documents from your builder [or seller, if you are buying a previously owned home], before you invest.
To help you in your home-buying process, RealDocs has created a mobile app that aims to help you determine what documents are required for a particular property based on the type of property, and most importantly, the applicable laws of your state. Feel free to download it from the Google Play Store, by clicking here.