By definition, a ‘Certificate of Occupancy’ or ‘Occupancy Certificate’ (OC) is a document issued by the local government agency or development authority certifying that a building complies with the national building codes and is suitable for occupancy. Whether a buyer plans to occupy the property for end-use or is looking to resell the space, OC is necessary for a real estate transaction.

But, some questions need clarity, like who should apply for OC or procure it from the governing body? What is the procedure for obtaining the document, and what other documents are required to avail it? The article attempts to answer all such common questions and demystify the concept for a buyer.

Who is responsible for obtaining the OC?

A builder/developer is responsible to apply for OC with the Municipal Corporation or development authority of the city/region that the property is situated in. The certificate is awarded only after the inspection authority is satisfied that the project has been constructed in accordance with the approved building plan and mandatory norms.

Raphael D Souza, CEO, Ruvins Estate avers that OC is an important documents that ensures the supply of basic amenities such as electricity, water and drainage system. The builder cannot give the possession to the buyer unless the occupancy certificate is obtained.

However, in some cases builder can avail partial OC and offer the possession. For instance, in mixed use development projects, a builder can obtain a partial OC for partly completed residential project and handover possession to the flat owners, whereas OC for shops or retail units in the under-construction stage can be availed later, shares, D’ Souza.

Occupancy Certificate

How does OC protect a homebuyer?

As stated above, OC is an important document that certifies livability status of the building as per civic standards. Therefore, a buyer should extract it from the builder to affirm its suitability for possession. Additionally, it seals the legal status of the building and preserves your ownership right.

Repercussions of occupying the building without OC:

  • The building may be declared illegal and authorities may seek eviction
  • It can be demolished owing to its illicit status
  • Problems in availing loan against property or reselling it
  • Municipal authority can anytime disconnect the water and electricity supply without any intimation
  • Higher property tax may be imposed as penalty
  • In cities like Bangalore, it will be difficult to avail Khata certificate

What are the important documents required to avail OC?

Important documents to be submitted by the builder to avail OC includes:

Ideally, a builder should submit the OC application with the Municipal Corporation within 30 days of completion of the project. However, buildings that have certain design deviations and have flouted the approved building plans are not eligible for occupancy certificate.

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What if the builder refuses to provide OC?

In case a builder refuses to provide OC, a buyer has the complete right to move to the court and file a complaint in the consumer forum, followed by an application fee. A notice can also be issued against the builder asking him to handover the document within a month.

For projects registered under the Real Estate (Regulation and Development) Act, 2016 (RERA), homebuyers can file their grievances with their state’s regulatory authority on the official website. The minimum fee to file a grievance involves an application fee (Rs 1000), however, the amount is subject to variation from state to state.

Ensure that you receive the original document from the builder and not the copy or receipt of OC. You will require an authentic OC when applying a home loan or reselling the property.

OC and RERA

Partial OC

Ever since the implementation of RERA on May 1 2017, there has been a speculation about which projects will be under the purview of the Act and which will be granted exemption. Clarifying the ambiguity, the government has brought all ongoing projects (commenced before May 1, 2017) that have not received OC under the ambit of RERA.

However, some states such as Uttar Pradesh and Haryana have diluted the norms set by the Central government, exempting developers and builders from RERA penalties. For instance, if the builder has applied for an OC or has received partial OC before the implementation of the Act is exempted from the ambit of RERA.

Experts point out that developers of residential projects that are built in phases can acquire OC for each completed phase and offer possession to homebuyers. For example, if an ongoing project is planned to be built in four phases, the builder can apply for OC even after completing just one phase and be out of RERA ambit as per UP RERA rules. This exemption will weaken RERA’s ability to safeguard buyer interest and guarantee timely possession.

Nevertheless, Sudhir Narang, a real estate developer, highlights that excluding real estate projects with partial or complete OC/CC from RERA's ambit does not free developers from the responsibility of ensuring timely completion of the project. Despite the exemption, developers are accountable to ensure timely delivery of the project.

In order to avoid getting caught in the crosshairs of the law, ensure that your new home has an occupancy certificate before you move in.

What are the consequences of not having an Occupancy Certificate?

As mentioned earlier, not having an occupancy certificate can lead to legal and financial troubles. The local government can impose heavy fines and even order the demolition of the property. Moreover, if there is any accident or damage to the property, the buyer may not be eligible for any compensation or insurance claims. Therefore, it is crucial to ensure that the property has a valid occupancy certificate before buying it.