What are Possession & Occupancy Certificates?


Date: 2-September,2021Last Updated:
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Possession Certificates and Occupancy Certificates are two important documentation that every home buyer must possess. However, there are some of us, who does not know about them in detail.

So let's explore these two!

What is a possession certificate?

A possession certificate is a document that is produced by the seller while selling real estate to a customer stating the date of possession. The possession certificate is issued by gazetted officer or tahsildar in the rural area and RDO(Revenue Divisional Officer) in urban areas. One can use this document while applying for a home loan from a Bank. The possession certificate also contains the timeline of the final payment that has to be paid by the buyer.

Excluding the former one, there are 2 other types to the possession certificate. They are a Conditional possession certificate and occupancy certificate.

What is a Conditional possession letter?

A conditional possession letter is a document through which the buyer can state his dissatisfaction with the builder asking for the renovation of the real estate or redesigning the infrastructure according to his desire. To put it simply, let's say you aren't satisfied with the property through the property is in your possession. This dissatisfaction could be anything. Varied from the bad integrity of the property, inadequate construction, or defective work. In those circumstances, you can get a conditional possession letter and Relay your dissatisfaction with the builder's copy of the letter.

In the letter, you can put all the necessary details you want to change about the infrastructure and ask the builder to make those necessary changes. If the builder fails to fulfil those details, then you can take the matter to court.

How to get a possession certificate?

Local authorities issue the possession certificate after examining the premises whether it has been made according to the approved plan or whether it is breaking any local laws. If there is none, then it's likely to be issued within seven working days.

It is issued by the local authorities to the buyers.

Necessary credentials that are needed to issue possession certificate

To obtain a possession certificate, you have to submit the following documents:

  1. Project commencement certificate.

  2. Project completion certificate.

  3. Latest property tax receipt.

  4. Copy of the approved plan

What if you don't have a possession certificate while buying a real estate

Without the proper certificates, you won't be able to exert your right over the property as there has been no proper transfer of possession, and you have no right to inhabit or use the property for any purpose. The absence of a possession certificate signifies that the property is still legally under the possession of the builder. Where the buyer is inhabiting illegally, in such circumstances, the buyer can be asked to move out from the property by the local civil authorities.

Is registration for possession certificate necessary?

A possession certificate is required to obtain few particular benefits of the Government Subsidies like Tax subsidies and more. In order to obtain those benefits, the possession certificate needs to show that the possession of the house lies with you.

What is an occupancy certificate?

A possession certificate won't verify you as the rightful owner of the property unless you get an occupancy certificate. An occupancy certificate implies that you are the rightful owner of the property. In the Indian real estate business, it's mandatory to have an occupancy certificate. If you don't have one, then the local municipality board can give judgment on the property as an illegal asset.

This documentation or certificate is issued by the local authorities that are the local municipal authorities, witnessing that the entire construction work has been completed as per the consented plan and the building is ready for occupation. It also implies that the property has been constructed in support of the local laws.

Difference between Possession certificate and occupancy certificate

A possession certificate implies the completion date of certain properties, or it states that the property is possessed by you. It doesn't confirm you as the rightful owner of the property. Likewise, on the other hand, the occupancy certificate states the completion of the project as it states the building is ready to be occupied. It also states you as the rightful owner of the property.

How to get an Indian real estate occupancy certificate?

In every state of India, the process of issuing occupancy certificates is different from each other. In Karnataka, an occupancy certificate is issued by a statutory authority. Such as BBMP(Bruhat Bengaluru Mahanagara Palike) or BDA(Bangalore development authority).

In Karnataka, As required by the law, all builders and developers in the state are supposed to register their ongoing projects with Karnataka RERA(Real Estate Regulatory Authority).

Importance of the Occupancy Certificate

You should get hold of the occupancy certificate and possession certificate before buying a home. They are essential when you decide to sell your house or mortgage. Every buyer should buy a property only after the completion of necessary documents. Because without the occupancy certificate, the local authorities can deem the property as illegal.

Necessary documents needed to issue occupancy certificate

Submission of the necessary documents along with the application to obtain occupancy certificate:

  1. Commencement Certificate

  2. Completion Certificate

  3. Built and Section plan

  4. Photographs of the completed building

  5. Tax assessment with tax paid receipt

  6. Copy of the approved plan

What if the developer fails to give you an occupancy certificate?

If the builder refuses or fails to provide an Occupancy certificate, you can take legal action against the builder. Legitimate notice can be issued, asking him to provide the Occupancy certificate, or you can even take the case to the consumer court.

The real Estate Regulation & Development Act (RERA) is expected to notably minimize the instances of such fraud by builders or the seller. However, as the property owner, you have a lookout for such fraud, or you need to ensure that all the important documents are within your grasp, to secure your right over your property.

Is it Necessary to have an Occupancy certificate?

Yes, it is necessary to have an occupancy certificate of your real estate. As the law states, you cannot legally move into a building until the builder gets an occupancy certificate from the respective local administrative. Failing to obtain an occupancy certificate can be resulted in facing penalties by the local administration.

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