Param (Software) 09 January 2015

Occupancy certificate clauses in sale agreement

Hi,

I am looking forward to buy a flat in Bangalore with an apartment with below state. Could you please suggest how to proceed with the sale agreement?

Situation:

A ready to move in apartment (G+3) with 36 units. 30 units got sold & 27 units got occupied by the buyers. OC hasn't been provided yet. The builder is promising to provide the same.

There are quite a deviations from the approved plan. There is a set back deviation & In the terrace of the apartment there was a penthouse, 2 flat units, Gym and Club house which are deviations from the approved plan. In the approved plan there was only G+3 there is no mention of penthouse, 2 flat units, Gym & Club house in the terrace.

Now, the builder says (via Sales representative), due to TDR (Transfer of Development Rights), they had constructed those extra units in the terrace floor (Penthouse, 2 flat units, Gym & Club House) and they (the builder) are planning to get the approval for those units as well.

However, the builder has not applied for the following yet.

1. TDR approval

2. Approval for updated plan

The builder says, They had applied for NOC for the older approved plan, once they got NOC they will apply for the approval of TDR & new updated plan together. The builder is promising to get the OC on his own expense and agrees to put a clause in the sale agreement as well.

Now, the builder wants me to get into the agreement & registration (once bank loan process is completed).

However, If I pay all the amount & register then I don't see any hold on builder. The builder could abscond or delay in producing the OC, once all the units are sold. Even if I approach the court how long the legal battle will take? The builder might just prolong the legal battle and make me feel to lose the battle without getting OC? What if the builder is absconded?

Below are the options I am thinking which will safeguard my money. I don't see a point in paying full amount when there is no OC.

1) Register the apartment with 90% payment & pay the remaining only after OC is produced. With this I can move in.

2) Just complete the sale agreement (20% payment) & wait for another 6 months to do the registration only after OC is provided? If OC is not provided till that time, then walk off the deal?

3) Register by paying full amount & put a indemnity clause to repay the penalty or damages if OC is not provided by the builder in stipulated time. But here how will I get back my money. Once I paid all the amount then I still have to pay to battle the legal & for the process of getting OC.

Is there any better option available for this scenario? Please note the other buyers are already staying in the flat without OC. All of them are expecting the OC. The builder says he will get the OC on his own cost and he accepts to put it in the Sale agreement. But I am wondering whether there is any catch. Because, with so much deviations (penthouse and other floor units in terrace and set back deviation), I am really concerned whether the builder will pay out of his pocket to get those approval. My friends gave a word of caution he might not do it, but I am looking for a suggestions.

Thanks

Reply Follow

3 Replies

Hardeep (Business) 10 January 2015

Just my thoughts ;

1) This really depends upon your ability to handle risk. Recently, many " unauthorised" colonies themselves in Delhi have been " regularised" !

2) Strictly speaking, all without OC are illegal Occupants and the authorities would be within rights to serve eviction notice on them.

3) Builder promise to Customers does not raise a claim on the Municipal Authorities and they are not bound by it.

4) One extra floor itself is a severe deviation. However, at the most this floor could be demolished at the cost of builder / occupants. Setback deviation could be compoundable ( check respective building bye laws on this.. )

5) You could put whatever you want to "safeguard"your interest. But the fact that you knew the state of affairs and became a party to it by accepting the illegality to begin with does not go strongly in your favor.

6) Cases drag on for years - I am aware of one such Society where for more than 10 years similar case is on - in the interim the builder declared bankruptcy and later died !! Society is almost 90 % occupied - all without OC. But no Registeries happened there ( due no OC, I think ) and no further resales are now happening there.

T. Kalaiselvan, Advocate (Advocate) 14 January 2015

In the scenario explained by you, it appears that you have not got a legal opinion about the property so far from a experienced lawyer dealing with the subject. These are all the circumstantial events which may happen or not. If the builder is not fulfilling his promises, the unnecessary litigation, mental tension besides loss of money, energy, time and mental peace. Therefore take the advise of a lawyer in the local and proceed after taking his opinion and if need be you may even go for the second opinion before entering into sale agreement. You may suggest your proposal to the lawyer and seek his opinion on them too.

Param (Software) 19 January 2015

Hi,

Thanks for your responses.

I have few updates & questions which I like to clarify.

the builder agrees to put a clause in the sale agreement & then register the property. I heard the sale agreement won't be valid (or doesn't hold good) once a property has been registered? Once the property is registered then only the sale deed will come into the picture.

Question:

1) Can I put the clause about OC in sale deed? Builder says we cannot mention it in sale deed. Since we cannot put any commitment related stuff in sale deed.

2) Can I execute the OC clause in sale agreement after property being registered? The builder says one can execute it but I want to get second opinion

3) Can indemnify clause in sale deed help me out in this situation?

Thanks