Should You Make The Final Payment Before Receiving Occupancy Certificate

An occupancy certificate (OC) is one of the most important documents as for as home buyers are concerned. However, do not confuse an OC with a completion certificate.

An OC established that a housing apartment has in place the required civic infrastructure, including sanitation, water, electricity and such other basic amenities. A completion certificate, on the other hand, signifies that a competent authority has deemed a housing apartment fit to be passed on to home buyers.

Any competent authority would look at whether the building has been developed according to the approved plan and whether its layout and specifications are in line with the building bye-laws of the area. If all is well, the authority approves it and hands over the completion certificate to the developer. After receiving this, the developer seeks the OC from the authority.

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Now the question arises, should you make the final payment to your developer without him obtaining an OC?

Though it is advisable not to do so, much depends on the conditions laid out in the buyer-seller agreement. For instance, if the agreement says that the OC would be given three months after the buyer makes the final payment, and if the home buyer has signed this contract, both parties are bound to honour the contract.

However, recently the Chief Minister Devendra Fadnavis-led government in Maharashtra decided to go down heavy on such developers in capital Mumbai. Over 56,000 buildings in the city do not have an OC which makes matters worse. The move to tackle the mushrooming of such units has been backed by the Brihanmumbai Municipal Corporation (BMC) .

In fact, a buyer can file a complaint if the developer refuses to or delays the OC or allows possession before the OC. In the interim, such a buyer can also ask the developer for rent during the delayed period. At this stage, you may be thinking, should you pay the complete amount before taking possession? We suggest you honour the terms and conditions of the sale agreement. If you don't, the developer can terminate your agreement. However, if the developer does not keep his part of the deal, the only option left for you is to proceed legally against him. This is because every buyer-seller agreement clearly lays down stages and amount of payments you owe the developer. You should be clear on your side.

What Is Fit-Out Possession?

For those balancing rents and EMIs (equated monthly installment) at the same time, any arrangement to save up on the costs would look attractive. If the developer told you that he would offer you a fit-out letter and you could take possession of the unit because it might take some time before the OC would be ready. The written document may lure you into accepting the offer, but it is illegal. Developer bodies such as CREDAI have also said that it is unsafe to accept a fit-out without an OC.

What Does The Law Say About OC?Who issues this?

An OC is issued by a competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity. If a state issues just one paper, a completion certificate or an OC, one document would fulfill both the purposes.

Who's responsible?

A developer will be responsible for obtaining the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws or other laws and to make it available to the allottees.

What happens in the absence of local law?

A conveyance deed in favour of the allottee or the association of the allottees or the competent authority has to be carried out by the promoter within three months from date of issue of occupancy certificate.

When should you take possession?

Every buyer should take physical possession of the apartment, plot or building within a period of two months of the occupancy certificate issued for the said apartment, plot or building.

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