The Saga Of Occupancy Certificate in Bangalore Apartment Complexes-CLOSED
Thought that below would be useful for newcomers, less knowledge in RE.
Here is an interesting search term that one visitor has actually used to search in Google - which brought him to this blog/website of mine. He has used this search term "do i need an occupancy certificate for a flat in banaswadi bangalore".
I remember reading a number of anxious queries/heated debates on the subject of "occupancy certificate" in the Indian Real Estate Forum - I had given 1000s of advises freely to 10's of 1000s of people.
This above "search term" obviously means there is a lot of confusion and anxiety, misinformation and rumours spread about the "need" for or "absence" of Occupancy Certificate.
In brief, let me try to explain here the how and what of it.
The OC for the Building/Complex is required by you only if you are going in for a bank loan to purchase the flat there in the complex because the bank requires it as a document to approve the loan for the property. Without that OC, the bank will not approve the loan and hence you cant buy it on Loans/EMI or bank funding.
Now, when does one get OC? You can get it only after the building is completed, fully ready to occupy. Not before that.
Then how do banks approve the loans without OC since all of you anyway buy flats everyday all over Bangalore?
During the construction of the project, banks are not aware or will not know to what extent the builder will deviate from the approved plan. So, the question of deviation or OC can not be guaranteed. Since banks exist in this world to do business and not bother about your OC, they will give you the loan during construction stage anyways (as they do not know about deviation since the builder will not tell the bank or you nor do you care. You care only about your bank loan. Period).
When you put up your flat for resale - the next guy who comes to buy your flat can not buy it from you if you dont have a OC for the complex. Since this new buyer new guy will also depend on a bank loan to purchase it just like you, he will not be able to buy it as his bank will reject the Loan Papers for want of the OC that you could not provide (since your builder did not provide it to you).
So, how do you sell then? You will have to find a fully funded self financed cash ready guy to buy your flat (somebody who will not go in for a bank loan). The other solution is Private Banks like Axis Bank, ICICI Bank do provide loans for such purchases even if the OC is not available. It is only Government Banks or Nationalised Banks which play havoc with your life when you ask for a loan when they insist on a OC from you.
Not having a OC does not mean that the building will be demolished. Usually, builders construct the entire top floor illegally. For example, if a G+4 is approved by BBMP, they will construct the 5th floor with another 2 dozen illegal flats. However, they dont sell it to you. Because they know it is illegal/unauthorised. What they do is - they keep it for themselves to let-out/rent out and use that entire illegal top floor for Rental Income risking the demolition of only the illegal top floor if ever and when the BBMP actually comes to demolish it (only the illegal top floor). In such cases, the builder will be the loser and he will lose that illegal top floor. The same is true for Pent Houses too which are constructed as "Deviation". Check if the Pent House is approved in the "Approved Plan" before you buy it. Ask if it is an illegal construction. In 99% of the cases, builders openly tell you that it is "deviation" and "unauthorised". They say so, openly, frankly, truthfully even about the entire top floor - if constructed illegally - those 2 dozen flats in the top floor as in the above example.
Moral of the story:
1) You can buy a flat in a complex even if it does not have a OC.
2) Only drawback is bank will not fund/finance you if it is a resale purchase you are making.
3) During construction too, if you are buying in an unauthorised, illegal top floor - the bank will refuse the loan to you. They will tell you "buy in the authorised G+4 floors, we will fund you".
4) You can take Housing Loans from Private banks to buy a resale apartment in a complex which does not have OC
5) 95% of all buildings in Bangalore are all done with deviation with illegal/unauthorised constructions in the top floor either with a swimming pool or with a club house or with extra unauthorised flats or with penthouses or with a Gym/Party Hall in the top floor. Anything on the terrace/top floor is unauthorised/illegal - especially if it is not shown/approved in the Sanctioned Plan by BDA or BBMP - depending on the jurisdiction.
6) If you are self funded/fully funded with own savings/cash - you dont have to worry about OC, hence go ahead and buy blindly if you like the flat and if it falls within your budget - since you dont need a bank loan anyways.
7) People already living/owning flats in buildings without OC have to worry only if they want to sell and want a profitable exit and if their buyer is a guy who is coming in with a Housing Loan in mind - that too especially only if he is insisting on a Nationalised Bank Housing Loan. You should educate him and encourage him to go to a Private Bank for a Loan to buy your property and thus make it a win-win situation for both of you.
8) Dont worry - nobody is going to bulldoze your building and throw you on the streets just because your builder did not give you an Occupancy Certificate for the building. Only that illegal floor at best may be demolished one day sometime in the next 20-30-40-50........years if the Supreme Court orders.
thanks Tananth. So does it mean that if the builder doesn't give it , it is still ok. I am going to get possession of my flat soon and the builder so far has been evading the topic of giving OC. Apart from the 'demolishing the illegal floor' thing, is there anything that might get us into trouble if the building does not have an OC.
Also what other documents are needed while taking possession of the flat. Your advice is highly appreciated.
This was a very good educative & nicely written advisory for new Apartment buyers.
I have one question. What if the builder sends the apartment to someone along with the Undivided share of land.
Example: Consider Undivided share calculation is so
Share Ration = SBA of your appartment/Total SBA of all the aprtments
You get some value. In my calculation I am getting 80 sqft less to what has been offered. So Can the builder sell the UDS to the new owner of the illegal apartment(pent house) from the broken out amount.
What if I get the UDS less than the calculation. Can I complain this to any court.
Ravikanth now says OC is required and must to have. Its contracting his own post. He changes his colors based on demand and the apartments that he holds in his hand. Show the true color Ravikanth. I had a good respect on you and lost it now now.
Whether a person recommends or advices..it should be the sole individual's responsibility to check all the needed documents ,rules , law what ever is applicable.. it's their own hard earned money.. there is no use blaming on others.. X recommended ..he bought ... so I bought.. I thought no demolition will take place.. we can pay penalty etc..
good work Nandu to point out the sharp U turn taken by this self imposed real estate 'consultant'. He indeed changes colors with the time. Regarding the post which tanath has posted here at the begining of the thread , if I remember correctly he (ravikanth) posted this article some 2-3 years before at IREF also, and once he was moved out of here he started his own blog and pasted it there also. And lolz what a U-turn now .....
To my fellow people who are in search of homes like me I have some pointers regarding OC:
1) As against Mr. Ravikanth's views 95% of us would be going to some or the other banks either for the first buy or in case when we are selling the other person most likely would be going for a loan only. So, the theoretical case , "worry only if you are going for a bank loan" doesnot apply. Very few of us have that sort of money in hand that we won't need banks and I doubt if most of us are willing to go for private money lenders at all considering the way they 'recover' their money.
2) If at all you as an individual turn out to be the unlucky one who is asked to evacuate your house by BBMP/BDA you are gone, because you dont stand any 'legal' possibility of fighting the case at all. and at that time believe me even our all beloved Mr Ravikanth will step aside as is clear from his most recent take on OC from his artcile. You will be left on your own to fight your case.
3) If you feel I am making castles in the air just type 'Platinum City Residents OC issue' on google and you will get textual as well as videographic proof of what I am talking about and what innocent buyers there have been made out to suffer for. (If my memory serves me right then that happened in March 2013)
Last but not the least, it is our hard earned money that we are putting into it. Neglecting something as basic as CC, Building Sanction Plan, OC is similar to entering a "no entry zone" and then when being fined by traffic police saying, " I was not aware that it was a no entry zone". We all know we would definitely end up paying fine , so similarly its your money , guard it and make sure it is going into right hands into right projects.