Real Estate Basics: Importance of Occupancy Certificate (OC)

By definition, a "Certificate of Occupancy (OC)" is a document issued by the local government agency or development authority certifying a building is compliant with the national building codes, and avowing it suitable for occupancy. Whether a buyer plans to occupy the property for end use or is looking to sell off the space, OC is necessary for a real estate transaction.

As per Section 2(zf) of RERA an occupancy certificate to be a certificate issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity. An occupancy certificate (OC), issued by the local authorities, certifies that   building is fit for occupation and   has been constructed as per the approved plan as well as in compliance with local laws.

It is the responsibility of the developer to obtain an occupancy certificate, once the project has been completed. In the absence of a valid OC for a property, the local municipal body has the right to initiate legal action, because without an OC, a project is deemed an unauthorised structure.

How to obtain an OC ?

The OC is obtained from local municipal bodies by submitting an OC application form along with the following documents: 

• Commencement Certificate         
• Completion Certificate        
• Built and Section plan      
• NOC for fire and pollution      
• Area calculation sheet of floor signed by an authorised architect          
• Photographs of the completed building    
• Tax assessment with tax paid receipt         
• Photographs of rain harvesting and solar panel    
• Copy of the sanctioned plan

Once the forms are submitted, the designated authorities inspect the building and confirm that it has adhered to the approved plan before issuing an OC. Legally and ideally, a builder should submit an application with the municipal commissioner for the OC within 30 days of completion of the property.

If you own a flat or an independent house, you can apply for an OC by approaching the local corporation or municipality, and if all approvals are in place, an OC is issued within 30 days of application. You will have to submit the same documents as the builder to procure an OC.

Obtaining Occupancy Certificate and Completion certificate can be mandatory under various  State laws.  As per the state laws, one cannot legally move into a building unless the developer gets an occupancy certificate from the respective local administrative or civic bodies. The corporation or municipality can ask the apartment owners to leave such illegally occupied flats or impose heavy penalties in the name of ‘regularization’.

How important is the OC?

Occupancy Certificate is a compulsory document that must be attained before you can occupy your home. Officially, you are not allowed to occupy your home without the OC. The OC is mandatory for applying for services like

• Water Connection       
• Sanitation Connection    
• Electric Connection 
• Applying for a home loan
• Switching your home loan

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.
• Completion  Certificate and Occupancy Certificate

The principal distinction between these two certifications are that while the Completion certificate certifies that the building construction has been done as per the approved plans, the building can be legally and validly occupied only once an OC has been issued by a competent authority.

It must be noted here that the development control regulations applicable in State of Maharashtra require a professional such as an architect, surveyor, engineer, supervisor or structural engineer to issue a Completion certificate to the competent authority, certifying that the construction of a particular building has been carried out in accordance with the approved plans in adherence with local laws. On acceptance of such Completion certificate, the concerned authority issues an OC to the developer of a project.

So, the main difference between Completion certificate & Occupancy Certificate is that Completion certificate shows that the building construction is done as per the plan which was approved by the concerned authorities. And after getting this, occupancy certificate will be given to all buyers so that they can take possession of their Flats / properties.

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.

If the developer refuses to provide an OC, or he hasn’t acquired one even after the project has been completed, you can take legal action against the developer. A legal notice can be issued, asking him to provide the OC and you can even take the case to a consumer court. Legislations like the Real Estate (Regulation and Development) Act (RERA), are expected to significantly decrease instances of negligence or fraud by developers. 

Conclusion

One of the popular judgments in this case is that of 'Faqir Chand Gulati Vs. Uppal Agencies Pvt Ltd'. The case was about deviations from the sanctioned construction plan and the non-issuance of Completion Certificate. The Supreme Court found the builder guilty and quoted that such acts not only disturb the planned development of the city but also risk the lives of the inhabitants of the building. Though there are qualified engineers in the local authorities who are responsible for taking care of such matters, it seems that they fail to discharge their duties. The non-issuance of a completion certificate is illegal and the builders cannot escape the consequences of such wrongdoings.