CLEARANCE CERTIFICATES

For new constructions, developers have to seek clearance from the local authorities. When the building is ready, the local authority awards a completion certificate stating that the approved plan has been followed. This is mandatory for getting basic amenities such as water and power.

But this certificate alone does not give occupation rights. One also needs an occupancy certificate, which is awarded after authorities check that the rules for fire safety, elevators, electrical wiring, water supply and waste disposal have been followed.

“The occupancy certificate is issued by the same authority that sanctions the plan. It does so after verifying that the building has been constructed according to the plan. This is mandatory for all high- and low-rise buildings,” says Sandhir of RICS.

Living in a building without occupancy certificate can be difficult. “Without it, residents may not be able to get water and sewerage connections. The local authorities can also demolish buildings that do not comply with their bylaws,” says Malpani of CommonFloor.com. “Usually, local authorities regulate such buildings by charging an impact fee, which has to be borne by the residents of the building,” he adds.

Many developers, especially the small ones, do not take occupancy certificates. “Builders escape through various loopholes in the law. Having invested their money, and after waiting for years, buyers move in without power, water and sewage connections, fearing they may lose the property,” says Singh.

This leads to other problems as well. Lenders do not finance properties without occupancy certificate at the resale stage. One needs completion certificate for registration of the property sale deed as well.

In some areas such as Gurgaon, a builder can get a provisional occupancy certificate that is valid for six months. A registered architect can also certify that the building is fit for occupation. This allows developers to offer possession faster. A delay in occupancy certificate means buyers have to wait longer for possession.