What is OC and Why is It So Important in Real Estate?

What is OC?

When a building is finished and determined to be in compliance with the approved building plans and safety rules, local authorities or municipal corporations then grant an OC. OC full form in real estate contexts is Occupancy Certificate, and this document’s significance when it comes to building compliance, safety as well as the property’s entry into the real estate market cannot be overstated. We at L&T Realty have put together a guide exploring the Occupancy Certificate, its various processes involved when it comes attaining an OC, the implications of a property not having an OC, and much more.
An Occupancy Certificate, first and foremost, certifies that the building satisfies all applicable standards and laws by adhering to the approved plans during the construction phase. This covers adherence to any environmental guidelines, zoning laws, as well as any relevant structural safety specifications. It concretely certifies that the property is prepared and set for occupancy. An OC certainly does its part to raise the market worth and appeal of a property from a real estate standpoint. Since prospective home buyers frequently want to know if a home has received all required permissions, having an occupancy certificate can actually be a major selling point.

Why is an Occupancy Certificate Important?

The Occupancy Certificate is a crucial component in the complex web of real estate transactions, representing the union of regulatory mandates, safety guarantees, cost considerations, and construction transparency. This crucial bit of paperwork which local authorities issue when a construction is completed, has multiple implications that affect different facets of property ownership and development as a whole.

Legal Compliance

A building’s conformity with the law is something that is attested to be the granting of an occupancy certificate. It shows that the building is being built in accordance with authorized building designs, zoning laws, and environmental standards. A property can be considered unlawful without an OC, which could have negative legal effects and cause issues with property ownership.

Safety Assurances

Arguably among the most important functions is to make sure that the occupants are safe. The certificate corroborates that the building was built in compliance with approved designs and all applicable fire safety requirements, structural safety standards, and other laws. Thanks to this crucial assurance of safety, tenants can feel secure in the in their living and working environment,

Financial Implications

An occupancy certificate has a significant effect on financial matters. For developers, finishing the project and getting the final payment frequently depend on getting an OC. This highlights the construction’s financial feasibility and guarantees the project’s successful completion for developers and finance institutions alike.
The lack of an occupancy certificate may also raise red flags for prospective home buyers. Without this important paperwork, lenders might be reluctant to finance a property. Additionally, it can have an impact on the property’s resale value, which might reduce the number of potential purchasers. As a result, an OC turns into a financial safety net for all parties in the real estate world, in addition to being a legal need.

Construction Process Transparency

The issuing of an OC highlights the construction process’s transparency. It provides assurance to all parties involved – developers, buyers, and any government entities – that the project has been carried out in compliance with the approved plans. This openness promotes genuine confidence, enhances the legitimacy of developers, and upholds the integrity of the real estate industry as a whole.

Regulatory Compliance

The project’s compliance with local building codes and regulatory norms is reflected in an OC. It guarantees that the developer has obtained all required authorizations and consents fostering a cordial rapport with regional authorities. By encouraging sustainable urban development and fortifying the regulatory structure, the document acts as a link between regulators and developers.

How to Obtain An Occupancy Certificate For Building Projects

In India, obtaining an Occupancy Certificate is a crucial step towards finishing a construction project. It offers a guarantee with regards to occupant safety and indicates conformity with legal criteria. The application, examination, compliance checks, and fee payments are among the most important steps in the process.

Submitting an Application for OC

The process of obtaining an OC begins with giving an application to the relevant local municipal corporation. Project information, certified construction plans, a completion certificate, and other required paperwork are usually included in the application itself,

Verification and Inspection

After receiving an application, the municipal authorities carry out a comprehensive examination to make sure that the construction follows building codes and laws, and is also in line with approved plans. Examining fire safety precautions, structural stability, and other crucial factors are all important aspects of this procedure. Performed by authorized officials, the on-site inspection is a crucial step in the process. This entails physically inspecting the construction to ensure that it adheres to safety regulations, complies with environmental standards, and fits approved designs. Before moving on, it might also be necessary to correct any deviations or issues that may be found.

Compliance

The process of issuing an OC also involves compliance checks. The authorities evaluate whether the project complies with all applicable statutory requirements, including zoning laws and environmental standards. Projects that depart from authorized plans can find it difficult to get the occupancy certificate.

Corrections

As mentioned earlier, the developer might be required to address any issues or deficiencies that are found during the inspection, before the occupancy certificate can be granted. This could entail fixing structural issues, putting in place various precautions, or making modifications to guarantee that the plans are in line with the approved designs.

Fee Payment

There are expenses associated with the OC issuance process. Fees related to the application, inspection, as well as processing must be paid by the developers. The cost structure could change depending on the project’s size and the applicable local laws.

Approval

The occupancy certificate can finally be issued with approval granted following the successful completion of the inspection, compliance checks, and correction of any faults found. This signifies the formal approval that the structure is ready for use and occupancy.

What is a Partial OC?

A Partial Occupancy Certificate (POC) is a legal document that authorizes the use or partial occupancy of particular rooms or levels of a building. It is given by municipal corporations, much like a full OC. A POC permits the phased or partial use of the whole area, in contrast to a normal OC, which would grant permission for occupancy of the entire property.

Can a Developer Obtain Partial OC?

A Partial Occupancy Certificate may be granted to a developer under specific circumstances. This usually applies when particular sections or stages of a multi-phase project are finished and judged to be in accordance with approved plans and safety requirements. While certain portions of the project are still being built, the POC makes it easier for those finished components to be occupied. The prerequisites for acquiring a POC differ and are scrutinized by regional authorities. The portions of the building that are allowed partial occupancy must adhere to the necessary safety regulations, and any unfinished work or non-compliant areas in the other sections shouldn’t endanger the tenants or the structure’s general safety.
POC are frequently sought for by developers in order to accelerate the occupation of finished portions of the structure, which enables them to earn some revenue, accommodate the homebuyers, and also possibly shorten the project’s timeframe. It’s important to remember that a POC does not absolve the developer of their obligation to finish the project in compliance with approved plans and standards. To receive a complete occupancy certificate, the remaining components need to go through further inspections and approval processes.

FAQ’s

How to check the occupancy certificate online?

If we wish to know how to check OC status online in Mumbai or elsewhere, it is actually pretty quick and simple. If you’re in Mumbai, you can visit the official Mumbai municipal corporation website and select the “citizen service” section. After filling up all the required information, you will be able to download the OC in PDF form.

What is meant by an occupancy certificate?

An occupancy certificate (OC) is a formal document that confirms that a property has been built in accordance with approved designs, meets all safety requirements, and is suitable for living in.

Is it safe to buy a flat without an OC?

Purchasing a flat without an OC carries a number of risks. The OC guarantees adherence to safety regulations and authorized plans. Without it, there is uncertainty about safety, legality, and compliance with rules, which could also result in trouble with the law along with certain financial risks.

Can I get a home loan without an OC?

It might be difficult to get a home loan without an OC, since lenders frequently need to have evidence that the property complies with safety and regulatory requirements.

What is the difference between OC and CC in real estate?

A building’s OC confirms that it is ready for use, and a completion certificate (CC) attests that the project’s completion in accordance with approved designs. Both serve similar purposes in that they legitimize the property’s adherence to various rules and regulations.

What are the documents required for obtaining an OC?

Confirmed construction plans, completion certificate, NOC, as well as property tax slips are among the paperwork needed to get an OC.

How long does it take to get an OC?

Following the submission of the application by the developers, an OC can be obtained within roughly 30 days, as long as various requirements are satisfied and proper documentation has been provided.

How Properties Fare With an OC vs Without an OC

With an occupancy certificate

Occupancy Certificate-holding properties are far more valuable in a stable real estate market since they are guaranteed to comply with regulations and also promise safety. An OC is an essential document that assures customers that a project will follow approved plans, which builds confidence and increases the project’s desirability in the market. Demand is fueled by the preferences of buyers for homes which have obtained OC’s because they may see them as safe and sound investments.

Without an occupancy certificate

Properties without an OC, on the other hand, are subject to higher legal risks and a decline in market value. Buyers become more skeptical when this document is missing, which prolongs negotiations and reduces the likelihood of a profitable resale. The project’s compliance with safety rules may also be questioned by authorities, leading to legal issues that affect the developer and the inhabitants of the property.

Case Study

On January 11 2022, the Supreme Court declared that a real estate developer’s failure to obtain an OC constituted under a “deficiency of service” under the Consumer Protection Act 1986. Homebuyers, the “consumers” in this case, have the right to demand compensation for increased charges that resulted from this deficiency. In a case involving Samruddhi Co-operative Housing Society Ltd in Mumbai and Mumbai Mahalaxmi Construction Pvt. Ltd, buyers sought a refund for excess taxes and charges paid due to the builder’s alleged service deficiency. The court emphasized that buyers are entitled to compensation for consequential liabilities arising from the absence of an occupancy certificate, such as higher property taxes as well as increased water charges.
For more information on the case, click this link: https://www.moneycontrol.com/news/business/real-estate/failure-of-builder-to-procure-occupation-certificate-a-deficiency-in-service-under-consumer-protection-act-supreme-court-7925391.html

Expert Insight

“An occupancy certificate is a crucial document attesting to the building’s compliance with local regulations and approved designs during construction. The OC indicates that the building is equipped with necessary civic facilities. It is also essential for any further transfer of ownership. Lack of an OC may end up delaying or preventing the sale of the property.” – Manmeet Kaur, Partner, Karanjawala & Co.

Impact on Tenants

The lack of an OC has a substantial effect on both tenants and property buyers. Renters who live in a property without an OC could be concerned about the safety and legality of their living arrangement. The building’s conformity with approved plans and safety rules is called into question by the absence of this essential piece of paperwork, which could put renters in danger both legally as well as physically. It may also have an impact on the property’s appeal, which could make it more difficult for renters to relocate or extend their leases. It’s fair to say that the lack of an OC will no doubt negatively affect the average tenants’ residential experience and also possibly have an adverse effect on their wellbeing.

What if a Developer Refuses to Provide an OC?

It is one possible for one to face a situation where a developer refuses to provide the OC for one of their properties. As a buyer, it is vital that you do not accept possession of the property without an OC. Fortunately, there are a number of things you can do when in such circumstances.
One option would be to file a complaint with RERA, the guidelines of which also state that the homebuyer has grounds to demand for compensation should the builder delay in providing the OC. According to RERA, if the builder refuses to give an OC, the buyer would also have the right to take legal action and face the builder in court. It’s also worth remembering that a buyer can file a RTI demanding an explanation as to why the OC has not been presented.

Recent Updates on Occupancy Certificate

As recently as January 2024, the Bombay High Court nullified an OC that was assigned to only a few apartment units in a high-rise structure in Mumbai. The ruling was made on the grounds that an OC should be filed just for a select few apartment units out of the entire structure. Along with the ruling, the court stated “It is illogical to expect that there can be an OC for one single floor in the middle of a building, but not for any of the other floors. An OC applies to the building and not to individual tenements in it.” The ruling elaborated that while OC’s can be issued for a whole building or up to a certain floor number of the structure, they cannot be obtained just for a few individual apartment units.

Check out this article for more details regarding the court ruling:
https://www.hindustantimes.com/cities/mumbai-news/oc-is-meant-for-entire-building-not-for-individual-flats-hc-101704833406457.html

Conclusion

The Occupancy Certificate remains an incredibly essential factor in the world of real estate, with it being a legal necessity for a developer to obtain the property’s OC before they can declare that the property is ready to be occupied. This is a vital bit of documentation that not only ensures that everything prior to possession has been carried out properly, but also promotes transparency and openness.

Disclaimer: Stock image used for representational purpose only.