Taking possession before getting Occupation Certificate

May 2025

The building is complete, but the Occupation Certificate (OC) is yet to come or the building might have a part O.C. The market norm is that the home buyer gets possession of his/ her flat to carry out interior related work. In some cases, the interior gets done and the family moves in and the O.C. is yet to be issued.

From a legal standpoint, what is the impact of doing so? Taking possession and moving into a flat without an Occupation Certificate (OC) is not legal, and it carries significant legal and practical risks. Below is a detailed explanation of the implications, based on Indian real estate laws and regulations:

What is an Occupation Certificate (OC)?

An Occupancy Certificate is a legal document issued by the local municipal authority or development authority, certifying that a building has been constructed in accordance with approved plans, complies with building codes, and is safe for habitation. It confirms the availability of essential utilities like water, electricity, and sanitation.

Legal Implications of Taking Possession Without an OC

• Illegal Occupation: As per Indian laws, including the Real Estate (Regulation and Development) Act, 2016 (RERA) and state-specific regulations like the Maharashtra Ownership of Flats Act, 1963 (MOFA), occupying a flat without an OC is considered illegal.
  Local authorities can issue eviction notices or impose penalties for unauthorized occupation. In extreme cases, the building may be classified as an unauthorized structure and demolished.
• Lack of Legal Ownership: A possession letter from the builder does not confer legal ownership. Without an OC, the buyer cannot claim legal possession, and their property rights may be jeopardised.
  This can lead to disputes or loss of property if the building is found to violate construction norms.
• Ineligibility for Utilities: Without an OC, obtaining essential services like electricity, water, and sanitation connections can be challenging or impossible. In some cases, utilities may be disconnected if the lack of OC is discovered.
  For instance, flat owners without an OC may face higher charges, such as 25% extra property tax or 50% additional water charges, as seen in some cases.

Financial and Legal Risks:

• Home Loans: Banks and financial institutions typically require an OC to disburse the final loan amount or approve loans for resale properties. Without an OC, securing or processing a home loan can be difficult.
• Resale Issues: Selling a flat without an OC is problematic, as buyers and banks will demand various document to verify the property’s legal status.
• Penalties: Local authorities may impose fines or regularization fees for occupying a flat without an OC.
• Safety Concerns: The absence of an OC may indicate that the building does not comply with safety standards, such as fire safety regulations or structural integrity requirements. This poses risks to residents.
  The Supreme Court of India has ruled that offering possession without a completion certificate and firefighting clearance is illegal, emphasizing the importance of these certifications for safety.
• Liability for Builder’s Non-Compliance: If the builder has deviated from sanctioned plans or failed to obtain necessary approvals, the building may face legal action, including demolition. Buyers who take possession without an OC bear the risk of losing their investment.

Conclusion:From the legal perspective, it makes sense to wait for the O.C. before moving into your flat. Usually, there is a technical delay which has resulted in a delayed O.C., and patience is the right option. Possession to carry out interior work is a different aspect, but one should keep legal aspects in mind before moving in a flat before O.C. is received

~ Adv Deepak Tiwari
Founder and Director DM Legal Services

Source: Thane Realty News

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