Fraud in the Name of Fit-Out Possession?


The two year freeze on real estate projects in Noida by the National Green Tribunal over the Okhla Bird Sanctuary issue has led developers to start a peculiar new practice. To soothe the nerves of impatient flat allottees who have been demanding to move into their apartments, developers are offering them something known as ‘Fit-out Possession’. Until now we had only heard of fit-outs of commercial properties. Then what is this ‘Fit-out Possession’ of flats? And will you be safe opting for it? Let’s run through the following facts to understand the fine-print of such offers.

1. What is ‘Fit-out Possession’?
Developers in Noida region are offering ‘Fit-out’ letters to their customers, stating that they have applied for Completion/Occupation Certificate from the Noida Authority. And in the meantime, flat allottees can take up temporary possession of their units for the purpose of interiors and fit-outs. Developers are making it clear that buyers can shift into their houses only once the lease deeds have been executed.

2. Bait for Buyers?
Home buyers are paying through their nose every month, balancing EMIs and rent at their temporary accommodation. They will jump at the first opportunity to enter their home and get some work done. Playing on this sentiment, these fit-out possession offers demand that allottees first settle their accounts in full and final by making the balance payment. These ‘fit-out’ letters also do not give a timeline in which they expect to receive the Occupation Certificate from authorities.

3. What can go wrong with ‘Fit-out Offers’?
So buyers pay 100% for possession that is ‘temporary’. There is always the chance that the project could get rejected by the authority as being deficient in its amenities and service spaces. And the developer’s application for an Occupation Certificate gets dismissed. Your wait for your home gets even longer. And you have little bargaining power, because you just paid your developer the last 5% of your payment plan.

4. ‘Fit-out’ a tactic to buy time & skip penalty?
Builders who offer ‘Fit -out Possession are typically those who know their projects are not going to get the authority’s approval for an Occupation Certificate (OC). Either they haven’t paid all their dues to the authority. Or they lack No-Objection Certificates for fire, electricity, lift and structural safety, which are mandatory to get an OC. So with an offer of fit-out possession, the buyer thinks all is well and it is the authority now that has to act fast. When in reality, their developer is just buying time. Also the developer gets to evade paying penalty as soon as you accept a ‘fit-out’ offer. In the eyes of any court, you willingly accepted possession, even if temporary and so that clock stops ticking on the developer.

5. Fit-out ‘at your own risk’
You are putting yourself at serious risk by choosing to enter a tower which in the eyes of the authority is not worthy of being granted an OC. In short, not safe to live-in. Pawan Mangal, a government servant working in Noida accepted the fit-out offer for his flat in SDS NRI Residency in Greater Noida. Despite his repeated pleas that the faulty lift of his tower be fixed, he ended up being stuck in one with his young family for 30 minutes on one ill-fated day. “The flat was neither complete nor service area, lifts are not operational. Without lift how can we go and do fit outs. They are cheating buyers in the name of fit out possession.”

6. NDTV Ground Observations
Apart from lift-breakdowns, buyers also report incidents of theft and eve-teasing as projects without OC usually lack adequate security. On one such visit with home buyers to a project in Noida that has offered fit-out possession, we noticed that the inner complex was not at all safe for people to enter. Construction material yet to be cleared and scaffolding was yet to come off. Electricity shafts were open and fire equipment was missing in the service areas. And in the flats, there were missing walls, exposed fittings in the ceilings and cracked floors. So if something is to go wrong, during this fit-out phase, the buck stops at you and not the developer.

7. CREDAI slams ‘fit-out’ fraud:
We approached real estate developers’ body CREDAI to answer for these developers who are running offers of Fit outs. And even CREDAI came out sharply against this illegal practice. Manoj Gaur, President of CREDAI’s NCR chapter explained that fit-outs are legal only after the Occupation Certificate has been received and the registry of the flat done. Home buyers have to get their sale deed sub-leased in their name as part of a tripartite agreement between the buyer, developer and authority. The sub-lease has to then be registered. And only then you can take possession of your unit. This whole process is allowed only after the Occupation Certificate has been procured by the developer. The CREDAI NCR Chief says that “the NGT-Okhla Bird Sanctuary issue is settled and there is no reason for developers to not get an OC now. If today any builder is unable to get an OC, it is due to his own default.” CREDAI NCR cautions home buyers that they have the option to reject such offers of fit-out possession and that they must heed the authority’s repeated warning that possession without OC is not permitted in the Noida region.

Vasudha Sharma, Anchor & Correspondent- The Property Show

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