Your developer’s Occupancy Certificate (OC) provides verification of the project’s adherence to safety standards. It also confirms your status as the legal owner of your home. Here’s why it’s so crucial for a house buyer and developer.

The entrance to an under-construction luxury residential project in many big cities like Gurugram is lit up with a digital signboard publicising the counting down to the exact date when home-buyers will receive the Occupancy Certificate (OC) from the developer and be able to live in their luxury apartment as legal home-owners. This highlights the need of an OC for both the developer and the home buyer in a real estate transaction.

What do you mean by OC?

An OC is a legal document that certifies that a building, whether residential or commercial, is suitable for occupancy. It is granted by the local authority within 30 days to the project developer, confirming that the building has been built according to the authorised designs and is in accordance with all provisions stipulated in the state’s current building bye-laws. In fact, a developer must get a completion/occupancy certificate from the local authority under Section 11 (4) (B) of the RERA Act.

“People should ideally be able to occupy the building only after acquiring the OC, as connections for municipal services like as water and electricity can only be applied once the OC is received.” However, in most places, homebuyers move into their apartment before receiving the OC. Even though it is prohibited, the practice has been widespread,” says Anarock Group vice-chairman Santosh Kumar.

“The authorities in Tamil Nadu give a Completion Certificate (CC) stating that the construction is habitable. According to Mehul Doshi, vice-president of CREDAI-Chennai, “the builder can apply for water, electricity, and sanitation connections based on the CC.”

When an OC denotes trustworthiness
The OC is proof of the developer’s dedication to the inhabitants’ safety and security.

Before handing over the keys to an apartment to a house buyer or the keys to an office building to the inhabitants, a developer must get the project’s OC from the certifying authorities.

To a buyer, what does an OC mean?
Apart from becoming the legal owner of your property, having an OC from the developer comes with a slew of advantages. Furthermore, if you intend to sell your home in the future, it will benefit you.

“Ideally, a buyer should acquire an OC from the concerned builder once the building is finished and ready to be occupied,” Kumar says. “Because OC is not a required document for property registration and has no connection to the procedure, buyers mistakenly believe it is of lesser importance.” However, without an OC, owners may be denied access to basic civic services such as power and water. In the worst-case scenario, one may be ejected from the land, particularly if the project has violated environmental regulations. As a result, buyers should insist on receiving the OC from the builder before moving in. Most notably, the OC is a requirement for property buyers qualifying for a mortgage. Those selling their ready property without an OC, on the other hand, will be unable to progress if their prospective buyer applies for a house loan because banks require this document,” he says.

It is important to highlight that the building is unsafe to occupy without OC. In the event of an accident, the passengers have no legal recourse and are not eligible for any insurance claims.

For a home loan and tax benefits, you’ll need an OC
MeraLoanDoctor co-founder Nagesh Sharma explains the financial benefits of having an OC:

  • The OC is required to take advantage of the most important income tax benefit, which is the deduction of house loan interest and principal.
  • The OC must execute the ‘conveyance deed’ from the builder to the society or apartment association, without which the builder retains ownership rights.
  • The OC is required in order to obtain a home loan or any other property-based financing. The lender may waive other documents such as the Sanction Plan, Commencement Certificate, and so on if you have the OC.
  • If you want to sell the house, you won’t be able to do so unless you have a legal OC, as prospective purchasers regard the OC to be one of the most crucial documents in any real estate transaction.

Source: Times Property