• Builder doing possession of legally unliveable (no OC) property

Dear Sir,
    Our apartment in Bangalore will be ready in March 2016, as per the schedule in construction agreement, and we have paid more than 90% of the transaction value.  The project has several multi-storied towers and some of them have been completed and "key handover" of apartments is in progress.  However, the builder has NOT received occupancy certificate (O.C.) from Municipality and yet done "key handover" for those apartments.  As per my understanding, if there is no O.C. then the builder is forbidden to do any sort of handover.  And likewise, as purchasers, it is illegal to occupy such apartments for us.  As there is no O.C., the Deed of Declaration (DoD) has not happened and therefore, sale deed and its registration will not be possible.

With the above background, my questions are follows -
(a) Is my understanding correct as far as DoD and registration of sale deed are concerned?
(b) When a builder does "key handover" but without registration of sale deed, can I approach consumer stating the builder has handed over legally unlivable premises?
(c) As there is no sale deed due to lack of O.C., what risks do I carry from this litigation?
(d) Can sale deed be executed without occupancy certificate? (I am guessing YES).
(e) Does Indian law facilitate execution and registration of sale deed of under-construction property?  If so, please guide me on how should I approach the builder in this situation.
(f) What is a relatively safer course of action as per your recommendation?
Asked 2 years ago in Property Law from Bangalore, Karnataka
Religion: Hindu
1)The KAOA requires the builder/promoter/owner of the apartment to execute a document known as the Deed of Declaration. The Deed of Declaration (DoD) is a document that describes the property, i.e., the building, all of its apartments, the common facilities such as lifts, generators, fire fighting equipment, pool, gym etc., along with the ownership scheme giving the percentage share of each apartment

2) Along with the DoD, copies of plan approvals from local authorities and bye-laws of the association of owners is to be registered.

3) It has to be certified by an architect that the plans are accurate as per what is approved by the local body and what has been built. 

3) Deed of Apartment refers to the DoD (along with information regarding registration of the DoD, such as registration number, date, sub registrar’s office etc.) so that the ownership scheme is fully traceable and the title clear.

4) Urban Development Department issued a circular making it mandatory for people to produce Occupancy Certificates to BESCOM and BWSSB in order to get electricity and water connection.

5) you can move consumer forum against the builder for deficiency in service if he fails to obtain OC for building 

6) in the absence of OC you dont have clear and marketable title to your apartment . 

7) if construction carried out by builder has been contrary to the plans unauthorised construction can be demolished

8) It is true that OC is currently not mandatory for registration of sale deed , but it is mandatory for possession.

Ajay Sethi
Advocate, Mumbai
44493 Answers
2587 Consultations

5.0 on 5.0

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.”

2) 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.

Ajay Sethi
Advocate, Mumbai
44493 Answers
2587 Consultations

5.0 on 5.0

You are not alone in this plight. Thousands of homeowners are facing a similar quandary. Statistics say that nearly 10,000 buildings in Bengaluru, including 50% of apartments built after the Karnataka government introduced transfer of development rights (TDR) in the city in 2005, do not have OCs.
In many cases, though the building plans are approved, OCs are denied due to other violations. Obtaining an OC is a requirement under the Karnataka Apartment Ownership Act, 1972. The law says one cannot legally move into a building unless the developer gets an occupancy certificate from the BBMP or BDA. The corporation can ask apartment owners to leave such illegally occupied flats or impose heavy penalties. 
But it's not as easy as it seems, considering the quantum of violations, nexus between civic officials and builders and a lack of stringent laws. Many errant builders and developers have, over the years, gone scot-free, say those familiar with the working of the sector. 
There are several examples of builders disappearing without giving OCs and legal water connections to housing complexes. Apprehensive of losing their homes, buyers who've invested hard-earned money move into their flats and make do with water from pumps and water tankers.Following a real estate boom, unscrupulous builders began construction without approved plans, in an effort to increase profits. This not only broke down the system, but also fuelled corruption." 

A buyer can move into his/her new apartment only once the occupancy certificate (OC) has been received.  It is illegal to move into a flat or house without receiving the occupancy certificate.
The builder might not have sold all the flats in the complex. In such a situation, the builder is often reluctant to obtain occupancy certificate. If the builder has not constructed the complex based on the approved plan, then there is a chance that the builder might not be able to obtain occupancy certificate.

The owner of the flat can be forced to evict the flat in case he/she does not have occupancy certificate. 
Occupancy certificate is also required when the buyer applies for Khata. However, note that the occupancy certificate is not needed for registration of the property during purchase. This often leads buyers to believe that the occupancy certificate is not important. However, when such a buyer tries to apply for Khata, he/she will face problems obtaining it. Note that this Khata will definitely be requires in case the owner plans to sell the flat sometime in future. There is also a chance that the electricity and the water connection could be cut to the flat if the owner does not have the occupancy certificate.
Once the house is purchased, used and then resold at some later date, the new buyer shall demand OC. The new buyer might also intend to buy the flat on loan. In such circumstances, unless you have an OC for your flat, there is a high chance that the new prospective buyer might not be able to get a loan and consequently, be unable to buy the property.
Hope all your questions have been properly answered with the information provided above. 
T Kalaiselvan
Advocate, Vellore
34622 Answers
373 Consultations

5.0 on 5.0

1. Without OC the possession cannot be delivered. The absence of a valid Completion certificate/Occupancy certificate means that the building may not have been built as per approved plan, and the threat of demolition of unauthorised structure looms large. Further, if you want to sell or hypothecate the property, you will not be able to do so, if you do not possess Occupancy certificate as banks will be very reluctant to sanction loan. The purchaser alone would suffer in case of any deviation from sanctioned plan in construction.

2. There is nothing such as " legally unlivable premises''.

3, You can issue a lawyer's notice to the builder to refuse to take the possession till such time that he obtains OC.

4. Registration of under-construction property is permissible without any fetters.

5. Do not take possession unless and until OC is obtained.
Ashish Davessar
Advocate, Jaipur
22966 Answers
631 Consultations

5.0 on 5.0

1. The onus of obtaining OC lies with the builder and not on the possessor of the flats. However, in so many cases it has been found that registration has been done without receiving any OC.,

2. You can certainly approach the Consumer Court alleging deficiency in service and unfair business practice on the part of the builder but in that case your registration will be delayed. Since you have already paid 90% of the consideration, it will be prudent on your part to get the property registered in your name first. After getting the property registered in your name, you can approach the Consumer Forum on grounds as stated above,

3. Negotiate with the builder and find out whether he can get the flat registered with out the OC or not? If he can then get it first registered,

4. I know several cases where te builder has got the flat registered even before completing construction of the flat,

5. There is no specific bar on it. Moreover, the sale deed will not state that construction of the flat is yet to  be completed,
6. Get the property registred first and then file a consumer case as suggested above.
Krishna Kishore Ganguly
Advocate, Kolkata
18164 Answers
439 Consultations

5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
  Ask a lawyer