Overcoming the Occupancy Certificate hurdle to your dream home

Proceeding with registration when builders do not provide occupancy certificate is a risk that might make your property a B-khata property. Think before going ahead with registration!

Lack of occupancy certifcate might mean your dreamhome might have certain violations too. File pic.

“We are happy to inform you that your dream home is ready for possession and registration. Handover & registration process will be initiated on receipt of the balance payment. We wish you a comfortable stay in your new apartment.” 

This is the news you have been waiting for! Ever since the day that you booked the apartment, three years ago, you have been saving and planning to fulfil the dream of your very own home.

This email is soon followed by the Final Payment Request Letter (FPRL) with details of the final amounts due to be paid by you. It goes on to inform you about the consequences of delay.

Please note that if you fail to take possession of your unit, for any reason, by ……. (date), you will be charged Rs 10,000 per month as Holding and Caretaker Charges, till the unit is taken over. In case the unit is not taken over during the Warranty Period you will not be entitled for any rectification in your Unit. In case you fail to register your unit by ……. (date), you will be charged Rs 10,000 as one time documentation, coordination and logistic charges.”

This is irrelevant for you because you have no reason to wait. So you make the final payment, inspect the apartment, get defects rectified, sign the required papers and take possession (the keys). From then on, you are responsible for payments related to the flat which at this stage would be the electricity bill and monthly maintenance charges. You want to shift into your new home quickly because paying both the EMI on this house’s loan and the rent for your current home is really a waste of money.

Now that you have access to the flat, you quickly get the interiors done, have a house warming celebration after selecting a “good” day. Then you move in on another “good” day. In between somewhere, the builder tells you that the Warranty Period has begun (meaning that if you have construction problems in your flat, they will be rectified for a fixed period from a given date). You also get the property registered and become the “owner.” As with any new home, you do have small problems – no water in the taps, upswept corridors, lift not working. Nothing that cannot be overcome. The builder’s facility management will be around for some time, things will eventually settle down, and reach a stage of stability.

The story would not be very different for those who are buying a second, larger home, or for those who have bought the flat as an “investment.” No one wants property to lie idle and all would be keen to let it out on rent and start earning.

What has been described is often the regimen followed by builders in handing over “completed” apartments to buyers. In all of this, one very important factor has been forgotten. It is called the Occupancy Certificate.

What is Occupancy Certificate?

The Occupancy Certificate (OC) is a document issued by a statutory authority (such as BBMP and BDA in Bangalore) and it gives the applicant (builder) permission to “occupy” the property. It is required for commercial buildings and for residential buildings that have more than five units. OC is issued for an entire building, or a part thereof, and is not given to individual flats.

As per Section 5.6 of the Bangalore Municipal Building Bye-laws 2003,

The Authority shall decide after due physical inspection of the building (including whether the owner had obtained commencement certificate as per section 300 of the Karnataka Municipal Corporations Act, 1976 and compliance regarding production of all required documents including clearance from the Fire Service Department in the case of high rise buildings at the time of submitting application) and intimate the applicant within thirty days of receipt of the intimation whether the application for occupancy certificate is accepted or rejected. In case, the application is accepted, the occupancy certificate shall be issued in the form given in Schedule IX provided the building is in accordance with the sanctioned plan.”

The Bangalore Building Bye-laws 2003 can be downloaded here.

As per Section 5.7,

No person shall occupy or allow any other person to occupy any new building or part of a new building for any purpose whatsoever until occupancy certificate to such buildings or part thereof has been granted by an officer authorised to give such certificate if in his opinion in every respect the building is completed according to the sanctioned plans and fit for the use for which it is erected. The Authority may in exceptional cases (after recording reasons) allow partial occupancy for different floors of a building.”

Simply put, this means that the builder, on completion of the building, needs to apply to the statutory authority (BBMP/ BDA) for OC. If the building has been built as per the sanctioned plan, and fulfils the other legal requirements, the authority is supposed to issue the OC within 30 days. It is illegal for the builder to hand over the flats to the buyers without receiving the OC. It is illegal for the flats to be occupied / rented without the OC.

Coming back to the process of hand-over that many builders follow, here are two current, real-life cases. The author is in possession of all the papers and communication regarding them both.

Case 1: Let us call the builder “Reputed Builders”

The apartment complex is located in Bangalore West and buyers were promised possession by 31 March 2014.

19-Jan-2014: Letter is sent to the buyer informing him of the “completion” of the building. The buyer is to pay the final dues within one month, take possession within three months and register the property within five months, failing which penalties would apply.

The buyer pays his dues and takes possession within the stipulated time. It is taken for granted that a reputed builder like Reputed Builders would have fulfilled all the legal formalities when it announces that its building is “complete”.

17-Apr-2014: Email letter is sent to the buyer informing him that the Warranty Period has begun and would be valid for a period of one year.

The buyer then writes to Reputed Builders by email requesting for a copy of the OC as he would like to occupy the building. He also informs the builder that he would like to know when he can get the property registered.       

19-Apr-2014: Reputed Builders replies to the buyer by email:

“The necessary application has been filed within the stipulated time with the statutory authority to obtain the Occupation Certificate. However the timeframe to obtain the same depends up on the statutory authority alone as Reputed Builders has no control on the authority. Reputed Builders will liaison with the authority to get the OC at the earliest. We shall keep you posted on the same.

We would like to inform you that we have not received the registration dates yet. We will intimate you as soon as we start the registration process and the dates received from the authority. Kindly bear with us till then.”

The buyer immediately emails back:

“We will await the occupancy certificate. Please inform us when it is received. We would be registering the property after it is received. We understand that Reputed Builders has done the needful, but from a flat-owner perspective, without the occupancy certificate the apartment cannot be legally occupied. Therefore is it not inappropriate to start the warranty when the flat cannot be occupied? How will we know whether there are defects unless we start using the place?”

22-Apr-2014: Reputed Builders sends an email reply:

“We would like to inform you that the registration of the unit is not connected with the occupancy certificate. As per the mutually signed sale and construction agreement, you have agreed to register the unit as per the completion date indicated by Reputed Builders. Any delay in registering the unit beyond the due date indicated shall attract one time documentation, co-ordination and logistic charges of Rs.10,000/-. Please refer clause no 5.6, page 6 of construction agreement stating the same.

With regard to the warranty period, in case of any structural defects, same will be addressed by Reputed Builders.”

It is true that OC is currently not mandatory for registration, but it is mandatory for possession. By invoking a clause in the agreement, Reputed Builders is trying to intimidate the buyer. The buyer immediately emails back asking to discuss this with a higher up.

25-Apr-2014: The customer service representative (CRM) of Reputed Builders who has been replying till now gives the email address of her manager. The buyer writes to the manager:

“Completion of the flat for any owner is when the flat is legally occupy-able, that is, it is certified by the statutory authority that the flat and building is built and equipped with the necessary infrastructure in accordance with the laws and regulations, safe for living. Without an occupancy certificate, the flats in the apartment complex cannot be occupied by anyone. If they cannot be occupied, warranty declaration has no meaning. According to BBMP rules, occupancy certificate is issued within 30 days of applying for it, unless there is a problem with the property. I am aware that for registration occupancy certificate is not mandatory as per BBMP rules. As a reputed and responsible builder, adhering to the law, I am sure Reputed Builders would not like to force customers to register flats that for practical purposes are not certified as occupy-able.

I am ready to register the property today, as long as the building has an occupancy certificate. If required I am fine to meet you or anyone else to discuss this further.”

3-May-2014: The manager from Reputed Builders replies:
“We are in receipt of your email. We shall revert to you by 3rd May 2014. Kindly bear with us until then.”

To date (25-Jul-2014), no email or letter has been received from Reputed Builders. One phone call was received from CRM, asking whether the registration date could be fixed, which the buyer refused.

The buyer has made several calls and emails to the manager and senior manager. During one call with the manager, on being told that the law had been violated, he was told that this was the procedure Reputed Builders followed for all the properties. Being reputed builders, they always get an OC for all their buildings. The manager said that from their end they had completed the building and if the OC was not issued, it was no fault of theirs. She asked the buyer for proof of the violation he was talking about, which she would forward to her legal team.

During a visit to the apartment building, the buyer found that several flats are already occupied. Many are given out on rent. The block has been handed over to the owners’ association (that had already been formed on the completion of other blocks within the same compound). There is talk about getting the BESCOM electricity meter transferred from the name of the builder. All this when there is no OC!

The buyer is deciding on what steps to take next. Luckily for him, he is not desperate to either occupy or rent the property, but he is concerned that the Rs 76 lakhs he has paid is not yielding the expected returns.

Case 2: Let us call the builder “Reliable Builders”

The apartment complex is located in Bangalore North and buyers were promised possession by 31 December 2013.

4-Jul-2014: Email from Reliable Builders:

“We are glad to inform you that we have obtained fire clearance as well as Occupancy Certificate from the respective statutory authority for the building. We are in the course of obtaining multi-storied building clearance and also Chief Electrical Inspectorate to Government (CEIG) certificate. These two clearances will help us in getting power connection. We anticipate these clearances and power sanction by the end of August 2014. We shall send individual handover intimation letter along with balance payable details separately once power is connected.”

Let us review the two cases. 

While Reputed Builders has “completed” the project two and a half months ahead of time, Reliable Builders is already behind by seven months. Both the builders have favourable penalty clauses in their agreements with the buyers that will ensure that they will pay no penalty for delay.

Reputed Builders has got its flow chart all wrong. For it, the OC seems to be just an incidental piece of paper, whereas Reliable Builders has put this on top of its flow chart. It is clear which builder is following the law and which one is blatantly violating it. The violator is not only violating the law itself, but threatening the buyer with consequences if he does not violate it too.

What is wrong about occupying a building without an OC?

No Occupancy Certificate means that the building has not been given a “Pass Certificate”. This means that it does not have all the mandatory infrastructure/ clearances that make the building inhabitable. It is like you saying you have completed your degree but you do not have a Degree Certificate to show for it.

Apart from the structure of the building being complete, some of the requirements for OC to be issued are:

  • Built as per the sanctioned plan – including plinth, setback, height, FAR. Facilities like club house, party hall, etc. need to be in the sanctioned plan. Deviation till 5% may be allowed.
  • Fire Department clearance
  • Electrical Inspectorate Certificate, including lifts
  • Waste Management area and on-site composting facility
  • Sewage Treatment Plant of adequate capacity and treatment to standard, certified by the Pollution Control Board
  • Rain water harvesting
  • Airports Authority clearance (if within the range of an airport).

The law states that it is illegal for a building without OC to be occupied. There are several reasons for this, including:

  • The building is not as per the sanctioned plan, has illegal unsanctioned floors/ walls/ extensions
  • The building is not safe to inhabit because of quality of construction, safety of stairs/ lifts, electrical safety, fire safety, airline safety, etc.
  • The building is not capable of fulfilling its mandatory role in managing its waste, sewage, water.

Without OC, the building is technically unfit for occupation and hence in the event that any accident takes place, the occupants / users of the building can hold no one liable and would not be eligible for any insurance or compensation claims. Water, sanitary and electricity connections, if already obtained, are liable to get disconnected. Presently, OC is not mandatory for registering the sale of flats in Bangalore. However, the khata for the flat will not be issued unless the building has the OC. The flat also cannot be sold without the OC.

Despite there being a law, why are people allowed to occupy buildings without OC?

– Builders, without fulfilling the mandatory terms of sanction and/or promises to the buyers are eager to hand over and move on to the next project. By getting people to live in the flats, they create a shield for themselves. They also escape from the delay penalty clauses that are in the agreement.
– Buyers are eager to take possession of their homes. Many are not even aware of OC and what it means.
– Water, sanitary and electrical connections are being given on a permanent basis even without OC.
– There are tenants waiting to rent the property.
– The law is not being enforced by the government authorities.

Finally, it is the buyer who pays the price.

BBMP is quite aware of hundreds of buildings without OC. Owners are paying property tax, but still, until they get the OC, they face the risk of losing the property. The Campa Cola Compound in Mumbai is one such case. Ever since the talk of Akrama Sakrama in 2007, old violators are hoping to get their properties regularised while new violations continue.

What is the way forward for occupied buildings that do not have OC?

There are hundreds of buildings without OC in Bangalore and some have been occupied for over 10 years. It seems, they are waiting for Akrama Sakrama.

As VK Venugopal has mentioned in his article on Citizen Matters, Dec 2013, Akrama Sakrama would not be a long term solution. However, something similar would need to find space quickly, to start a process whereby these buyers do not face the brunt of the builders’ misdemeanours and the municipality’s blindness. (Yes, there is no way violations could have gone unnoticed by the sanctioning authorities.) While regularising the properties, both the builders and the concerned officers need to be adequately penalised.

What can buyers do to ensure they are buying flats that will come with OC?

– Check the builder’s previous projects. Ask to see OCs of those projects. If OCs have not been issued, the builder is best avoided.
– While it may not be obvious, the obtaining of an OC would override any clauses that the builder puts in the agreement regarding completion of the flat. Agreements that have terms that violate the law would not be enforceable. Still, it would be useful to include a clause at the time of booking the flat, that the builder will get the OC before handing over the flat. The OC is totally the responsibility of the builder and penalty clauses should be severe.
– If you have already booked the apartment and executed the agreement, do not take possession or register the flat without the OC. There are usually penalty clauses in the agreement that will force the builder to pay in case the delay goes beyond the grace period specified. Delay in issue of OC is usually one of the safety walls behind which builders take refuge, but if delay is on account of violations, it is possible to make the builder liable. Sometimes, builders will get a self-certification of completion done by an architect. Do not fall for this and insist on the official government OC. 

What can the government do to ensure that buyers are protected from unscrupulous builders and officials?

– BBMP/ BDA needs to have regular inspections scheduled for every property, so that problems resulting from encroachments and foundations are caught right at the start.
– When a builder applies for sanction of a new building or layout, his previous projects need to be checked by the sanctioning authority. If he has been denied OC, no new project should receive sanction.
– Make OC mandatory before registration of flats. The Hyderabad Municipality, in Dec 2013 was considering this move, which would definitely be effective in controlling unauthorised constructions.
– Make OC mandatory for water and sanitary connections. In November 2013, the Nagpur Municipality brought in a new policy whereby water and sanitary connections will be given only after OC is issued.
– Make OC mandatory for electrical connections. The Hyderabad Municipality has recently made OC mandatory for electrical and water connections.

The main law is in place. A few policy changes will help eliminate building deviations and unscrupulous dealings and can make a huge difference to buyers of flats. Eventually the city of Bangalore will benefit. All that is needed is political will.

Author’s update 11-Dec-2014
Reliable Builders, having received the OC, started handing over possession of the flats to the buyers and registering them from Oct 2014. Reputed Builders, who announced completion of the building in Jan 2014 and handed over its flats soon after, has still not obtained the OC 11 months on.    


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  1. Kartikey Khanna says:

    Dear Arathi – This is an awesome write-up. I really hope more and more people read this and make themselves alert and a vigilant buyer. I am going to save a hard-copy of this article.

  2. ashutosh garg says:

    What can be done if Government is delaying in issuing OC?

  3. vswaminathan says:

    Certainly you deserve to be thanked for the pains sincerely taken by you and frankly sharing seemingly own experience with a promoter/seller.
    i have only one nagging doubt; that is, have you perchance ever happen to have had a close look at what is the form and substance of so called OC being issued,- if at all so issued and anyone is so exceptionally lucky as to be the recipient and in possession of one such doct., considered essential. A related Info. , – sharing the fact that BBMP has long since ceased to issue a ‘clean’ OC; but instead, issue a ‘conditional ‘ one ; which, in a manner of speaking, has the effect of throwing back the (ball of) entire responsibility for ‘compliance’ to the promoter/builder , – may be found readily available in a comment posted quite sometime ago , on an article @citizen matters. To my recollection, comments have been similarly posted @praja.in.
    After locating and going through that post, If you have anything to add, may do so, for the common benefit of, and to be helpful to, the others.

  4. bangalore citizen says:


  5. bontala balasubramanyam says:

    Regarding occupancy certificate I suggest the following…the aggrements for sale and construction should show that after the oc is given only the registration has to be done.these documents should be registered and the sub registrar should verify this before registering.by this at the time of entering into agreement it self the flat costumer is protected.the sub registrar should insist on oc at the time of registering the flat .govt.should think this seriously

  6. Rishul Matta says:

    best article i have ever read on buying realty…

  7. Sageesh Rayaroth says:

    Is OC given on completion of full project? Or completion of particular flat?

  8. M Chandra shekar says:

    First of all, we thank the writer. The approvals and clearances is aimed at providing a safe shelter to the citizens by our Government, if complied. But, neither the builder nor the bureaucracy nor the lender nor the buyers ever check and verify the compliance, finally ends up blaming each other.

  9. Ajay K says:

    Very good and informative article by Arthi. It is a step towards clean governance.

  10. Sweta says:

    Very informative… help full to improve Citizen awareness

  11. Bipravee says:

    Hi Arthi Ma’m,

    I would like to know few things about OC and CC.

    1. One of the builders which we have visited is confirming that apartment building which does not have any floors above G+ 5 Floors and are small buildings do not need OC and CC.

    This will be cleared once akrama sakrama is passed.

    Is this TRUE.

    2. Also If the property has A-Karta and do not have oc CC and have small deviations.Can we buy those apartments? Will there be any legal issues in future?

  12. Aleem says:

    Very informative. Great work as a responsible citizen. Thank you.

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