I remember reading a number of anxious queries/heated debates on the subject of “occupancy certificate” in the Indian Real Estate Forum where under the username “RAVIKANTH” – I had given 1000s of advises freely to 10′s of 1000s of people on 100s and 1000s of projects all over Bangalore as a Career Real Estate Professional – when I used to help people freely on http://www.indianrealestateforum.com. But if you go there now, you will mostly find useless garbage discussions by immature young school kids. Some even brawl and even get into fist fights like primary school children. They call themselves Techies. The day I realized that about 6-8 months ago – that I was helping school drop outs there, I got myself banned there and decided never to help anyone freely. Some such school drop outs, every now and then, occasionally do come to this blog website of mine too – to pick up a fight with me by writing nasty emails to me to get some sadistic momentary pleasure out of it. They call themselves highly qualified highly salaried highly educated foreign returned Techies. But by behavior and decadence displayed, worse than school drop outs and auto-rickshaw drivers.
This above “search term” obviously means there is a lot of confusion and anxiety, misinformation and rumors 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 don’t 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 Nationalized 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 don’t sell it to you. Because they know it is illegal/unauthorized. 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 “unauthorized”. 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 unauthorized, illegal top floor – the bank will refuse the loan to you. They will tell you “buy in the authorized 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/unauthorized constructions in the top floor either with a swimming pool or with a club house or with extra unauthorized flats or with penthouses or with a Gym/Party Hall in the top floor. Anything on the terrace/top floor is unauthorized/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 don’t 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 Nationalized 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) Don’t 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.