Occupancy certificate delay: Buyers entitled to refund with interest

Buyers should turn to RERA or consumer forum to seek redress

The National Consumer Disputes Redressal Commission (NCDRC) ruled in a recent case that offering possession of an apartment without an occupancy certificate (OC) does not constitute a legal offer. It reaffirmed homebuyers’ right to seek refunds in delayed housing projects. 

Significance of OC 

An OC is the final approval from local authorities confirming that a building complies with sanctioned plans and safety norms, making it legally fit for occupation. 

“For homebuyers, the OC is not just an administrative formality but the very basis of lawful possession. Without it, the property is deemed unauthorised, exposing buyers to risks such as eviction, denial of utilities, or even demolition,” says Shankey Agrawal, partner, BMR Legal. 

Difference between CC and OC 

While both are legal documents, they serve distinct purposes in a real estate project. A completion certificate (CC) confirms that construction has been completed in accordance with the sanctioned plan. 

“An OC follows the CC, certifying that the building is fit for habitation and equipped with all necessary civic amenities,” says Darshana Velani, principal associate, IndiaLaw LLP. 

Who provides the OC 

Under Section 11 of the Real Estate (Regulation and Development) Act, 2016 (RERA), the builder must secure the OC from the local authority and furnish it to buyers or the society before possession. 

“The society maintains records post-handover, but developer non-compliance invites RERA penalties,” says Seema Sundd, partner, Karanjawala & Co. 

Agrawal adds that the NCDRC ruling makes it clear that securing and sharing the OC is the developer’s responsibility, and failure to do so amounts to deficiency in service.

 

Risks of possession without OC 

Taking possession without an OC involves serious risks.

 

“It violates municipal laws and can invite demolition, fines, or eviction orders. It also forfeits RERA remedies, exposes occupants to liability for construction defects, and, according to NCDRC rulings, renders possession offers invalid, entitling buyers to refunds with interest while impairing title transferability,” says Sundd.

 

Agrawal adds that it also weakens ownership rights and limits the ability to sell, mortgage, or finance the property.

 

Access to utilities can be denied 

Without an OC, municipal authorities generally deny water and electricity connections.

 

“Even if the service is provided to the builder in the absence of an OC, there is the risk of disconnection or refusal of a permanent connection,” says Agrawal.

 

Sundd says the Supreme Court prohibits permanent utility connections without an OC, deeming uncertified buildings uninhabitable.

 

“Provisional connections may be allowed during construction, but in their absence, residents must rely on interim measures such as tankers or generators, according to state civic directives,” she adds.

 

The absence of an OC makes both property registration and financing legally vulnerable. While a sale deed may sometimes be registered, this does not legalise occupation or construction.

 

“The Supreme Court bars loans and utility connections for uncertified buildings. So, most banks refuse home loans for ready-to-move properties lacking an OC, making both registration and financing legally risky,” says Agrawal.

 

Due diligence before possession 

Before making the final payment or taking possession, buyers should verify that the OC has been issued, either through the state RERA website or by checking with the municipal authority.

 

“Buyers should also obtain a physical copy from the builder and ensure it covers their specific building or tower,” says Agrawal.

 

Remedies for delayed or withheld OC 

If a builder delays or withholds the OC, buyers can seek redress under RERA or consumer forums for deficiency in service. They can also withdraw from the project and claim a full refund, as upheld by the NCDRC in the Mantra Lifestyle Homes case.

 

“This ruling reinforces that true possession begins only when a home is legally habitable, ensuring greater accountability and transparency in the real estate sector,” says Adnan Siddiqui, partner, King Stubb & Kasiva, advocates and attorneys.

 

Post-possession options

 

• Document the situation
• First request the builder to comply
• Check with the municipal authority on the status of the builder’s application
• Approach RERA or consumer commission for OC or refund with interest

The writer is a Delhi-based independent journalist