Developers, Homebuyers Oppose UP RERA's Occupancy Certificate Rule, Here's Why

On Monday, a prominent real estate developers’ association and a homebuyers’ group in Noida urged UP RERA to reconsider its directive mandating builders to obtain an occupancy certificate (OC) before issuing possession letters.

According to a report by news agency PTI, both groups stated that this decision was not in the best interest of homebuyers in long-delayed projects in western Uttar Pradesh, including Noida and Greater Noida.

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What UP RERA Say?

In a statement on June 8, the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) said promoters needed to receive OC (occupancy certificate/ completion certificate) of a project, before offering possession letters to allottees.

According to UP RERA, this was done “to prevent arbitrariness” being done by the promoters through the offer of possession letters sent to flat buyers and to eliminate the disputes arising between them due to this.

Industry Demands Reconsideration

“The UP RERA needs to reconsider this decision in the benefit of homebuyers,” CREDAI Western Uttar Pradesh Secretary Dinesh Gupta told PTI.

“It would have been good if this direction was made for new projects, but that sort of categorisation has not been made. This decision would impact the homebuyers in several stuck projects who have completed the units but are yet to get the OCs from local authorities,” Gupta said.

OCs are given by local authorities in Noida and Greater Noida. However, a large number of OCs and registries, among others, in several group housing projects have been on hold for a long in the twin cities due to various reasons, including pending dues by builders to the authorities.

Stakeholders say end-users, who buy a house to live in it, are faced with maximum trouble instead of investors, who buy flats as an investment option in stuck projects. This is because end-users pay not only EMIs on home loans but also rent on current accommodations.

“Without Understanding Ground Reality”

Abhishek Kumar, president of the Noida Extension Flat Owners’ Welfare Association (NEFOWA), felt the UP RERA is making rules “without understanding the ground reality”.

“The rule declaring possession without OC or CC as illegal is very disturbing. It is like using the same stick to drive everyone away. In old projects, where the builder is neither paying the money nor attending meetings, home buyers will face great inconvenience. They will have to bear the burden of EMI and rent together. This is not in the interest of home buyers at all,” Kumar said.

However, he emphasised that this rule will prove to be a “milestone” in new projects, where the land has been sold by the authority after taking the full amount.

But where OC or CC is pending due to the dues of a bankrupt or missing builder, these rules are not in the interest of buyers at all, Kumar said.

In its June 8 statement, UP RERA Chairman Sanjay Bhoosreddy noted that promoters send “final demand letter” and “final demand notice” using the name and language of “offer of possession”, which creates confusion among the allottees, and it carries some binding conditions.

“‘Offer of possession’ should be meant only for the purpose of taking possession,” he said.

CREDAI office-bearers noted that in 2017, UP RERA had made a provision for deemed OC, allowing possession in projects that had the four critical NOCs (no-objection certificates) for fire, electricity, lift and finance in them.

CREDAI Western UP Vice President Suresh Garg said generally, builders give a final demand letter in their offer letter after the OC, or deemed OC, that can be as per the terms of their builder-buyer agreement.

“But most builders mention the date of receipt of OC and letter number to give reference to the home buyers and to show credibility. The demand letter cannot be called a possession letter. If a builder does so, he should also clarify when the possession can be given so that confusion does not arise,” Garg added.

What Is RERA?

RERA stands for Real Estate Regulatory Authority. It’s an organisation in India established under the Real Estate (Regulation and Development) Act, which was passed in 2016. The purpose of RERA is to regulate the real estate sector and protect the interests of homebuyers.

Developers must register their projects with the RERA authority in their state before they can start selling. This ensures basic project details are available for buyers’ reference.