No Occupation Certificate For Your Flat? Why Builders Are To Blame


In Noida, home buyers are facing a new challenge. The residential project they invested their hard-earned money to buy a flat is ready since the last year or so. They have paid 95% of the flat’s basic sale price, and yet they have no visibility on when they can actually get physical possession of the flat. When questioned Developers say the delay is from the Noida Authority’s end. They are not issuing Occupation Certificates (OC) on time. An OC is a certificate which certifies a project as safe to be occupied by people on various parameters of structural safety, provisions for fire safety and so on. But when probed further, The Property Show discovered that there is more than meets the eye. Here are the top 5 things you need to know if you have a flat in a stalled project in Noida.

1. All land in Noida is leasehold and owned by the Authority. To construct a project, the Developer enters into a Lease Deed with the Noida Authority with a 10 year payment plan. The developer pays a 10% upfront fee to procure the license to kick-start construction on the land. The rest of the land payment is to be done in installments. The Noida Authority has revealed that developers in Noida have defaulted on these very dues. From big names to first-timers, about 80% of Noida’s real estate industry owes some Rs 30,000 crores to the Noida Authority alone. The unpaid land dues to the Greater Noida Authority and the Yamuna Expressway Authority also runs into thousands of crores.

2. The Lease deed between the Developer and the Noida Authority forbids the developer from sub-leasing the apartment to a home buyer until he clears all land payments. So the Noida Authority will not register the flat in the home buyer’s name until his or her developer is in the clear.

3. Unable to contain the massive outcry from buyers demanding possession of their homes, Developers are circumventing the issue by offering Letter of Fit-outs. These are basically offers of ‘Temporary’ Possession, simply to appease buyers by giving them the key to their home for a short-term. However buyers must beware that a Fit-out Letter only allows you to carry fit-outs or interior works in the apartment. You do get the key to your flat, but if you decide to start living in the flat, all liability of any eventuality is solely yours. If the Lift malfunctions or a slab of concrete falls injuring you, remember the developer is not to blame. Why? Because while offering you the Fit-Out Letter he collected the remaining 5% of the payment you were to give on possession and he adds a disclaimer that he is free from all responsibility in case of any mishap. He message to buyers is that such an offer is completely avoidable and because it is a clear sign that your developer is deficient in some performance aspect because of which he is unable to get an Occupation Certificate.

4. So what is the Noida Authority doing about this stalemate? Speaking to the Property Show, Rama Raman, the CEO of Noida Authority and Manoj Gaur, the President of CREDAI NCR shared that under a Re-schedulement Scheme started by the authority, several developers have managed to squeeze themselves out of the defaulter’s list by paying an upfront amount of 15%-25%. But there are a number of distressed developers who haven’t been able to take advantage of even this dole from the authority.

5. Even as the interest on the unpaid dues keeps on piling, the Noida Authority has assured that it will not take the extreme step of canceling the license of any developer. The Authority says it is mindful of the third party rights created by home buyers. And it can only freeze the issuance of Occupation Certificates to keep the defaulters in check. But what should be the home buyer’s next move after learning why their project is stalled? Well to start with you must group with your fellow allottees and file an RTI with the Noida Authority to confirm if your doubts about your developer defaulting on the Authority’s land dues are indeed true or not. If your suspicions are valid, approach the National Consumer Disputes Redressal Forum with a group complaint demanding penalty from the developer for the delay.


Vasudha Sharma, Reporter & Anchor, NDTV

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