Let me share a recent case regarding illegal construction and sales. A close friend based in Mumbai bought an under construction apartment in Thane in 2010. It was one of those rare instances when he made a big decision in an instant. As soon as he saw that sample apartment, he fell in love with it. Immediately, he booked an apartment on the 22nd floor; got a bank loan approved, paid the initial lump sum out of his hard earned savings and got the flat registered. He was happy; after all, registration meant that the paper work was properly done and with the property prices going up, he thought that he had made a wise decision.
However, after a year or so, there was an article in the newspapers about the same builder having constructed some other project illegally and the local corporation body threatening to demolish it. Although, his specific project was not mentioned in the article, he decided to examine the approvals of his project in detail. Only then did he realize that his project did not have a CC (Commencement Certificate) beyond the 14th floor. In effect, he had bought an apartment that not only did not exist physically, but also did not exist in paper. The most shocking part was that the same had been registered as well!!
He was in such a hurry that he did not bother checking out whether the builder had proper commencement certificate or not. He skipped the necessary homework to close the deal quickly, a decision that gave him sleepless nights later! As a real estate investor, I am aware of many such cases. However, my intention is not to put off or scare buyers; rather the intention is to explain some of the process involved in construction approvals so that one is conscious about them while taking property decisions.
Buying a property without ensuring that the developer has the necessary approvals is one of the most frequent mistakes that buyers make. Home buyers tend to let their emotions and dreams get the better of their senses, fall in love with a beautiful advertisement and make rushed decisions. Buying a property is perhaps the biggest investment that most people make and they should be extremely careful so as to not get duped by corrupt builders. Below, I am laying out a broad list of construction approvals that every buyer should be aware about before signing the dotted line. (Please note that these are construction approvals and have nothing to do with land; which is a separate subject altogether. For reference, I have used Mumbai as an example but it would be as applicable in any other city)
As far as the city of Mumbai
Approved Plans
First and foremost, please see the approved plans of the project. The local planning authority approves the plans of any development. The approved plans are issued in duplicate, i.e. copies to the owner & architect.
First and foremost, please see the approved plans of the project. The local planning authority approves the plans of any development. The approved plans are issued in duplicate, i.e. copies to the owner & architect.
The approved plan bears signatures of owner, architect, municipal stamp of approval with case / file number, date of approval and is signed by the authorized officer of the Corporation. Validity of approved plan is one year and requires revalidation every year thereafter.
Intimation Of Disapproval (IOD)
Along with approval of plans, the local corporation issues a letter of approval. In Mumbai it is popularly known as the IOD. (Intimation of Disapproval). People get confused with the term IOD. In fact even though it is termed as intimation of disapproval, it is to be read in its positive form; which means the IOD is a letter of approval subject to compliance of terms & conditions mentioned therein. Validity of Letter of approval (IOD) is one year unless revalidated yearly.
Along with approval of plans, the local corporation issues a letter of approval. In Mumbai it is popularly known as the IOD. (Intimation of Disapproval). People get confused with the term IOD. In fact even though it is termed as intimation of disapproval, it is to be read in its positive form; which means the IOD is a letter of approval subject to compliance of terms & conditions mentioned therein. Validity of Letter of approval (IOD) is one year unless revalidated yearly.
The intimation of disapproval is issued with a list of NOC’s, which the applicant must obtain separately from various departments and government authorities. Final clearance to construct is given once the developer obtains all the NOC’s. The NOC’s assigned to the intimation of disapproval are case specific. However, it would generally include NOCs from the Tree Authority, Storm Water and Drain Department, Sewerage Department, Environmental Department (concerned with debris management), Traffic and Coordination Department, CFO (Chief Fire Officer - Fire clearance)
Please note that only approval of plans and issue of IOD, is not a development permission unless it is clubbed with Commencement Certificate. However, most developers do start excavation work once they secure the IOD
Commencement Certificate
On submission of all required NOCs mentioned in the IOD and on compliance of the IOD conditions, the Commencement Certificate is approved. It is a development permission issued by the Local Planning authority. It is generally issued together with approved plans & letter of approval in other cities except in Mumbai. Validity of Commencement Certificate is typically one year from its date of issue. Only after obtaining the commencement certificate is a developer entitled to start the work.
High Rise Committee Approval
The High-rise committee was set up by the Maharashtra state government due to the surge in projects a few years ago and concerns about the effect it could have on the environment and infrastructure. It studies and clears every building being erected over 70 metres. According to the BMC's construction norms, a high-rise is any building more than 70 metres tall. Usually this means the building has at least 18 to 21 storeys, depending on the height of individual floors, which can vary from 3.2 to 4.2 metres in height.
Environmental Clearance
The principal Environmental Regulatory Agency in India
Construction Projects for Environmental Clearance fall under two categories- Category 8(a) Building and Construction projects and Category 8(b) Townships and Area Development projects. No environmental clearance is required if Built-up area of the project is less than 20000 square meter (sq.m) for Category 8(a) and if project area is less than 50 hectare and/or built up area is less than 1,50,000 sq.m for Category-8(b).
Clearance from SEIAA is required for Category-8(a) projects if the built-up area is between 20,000-1,50,000 sq.m and if it exceeds 1,50,000 sq.m then clearance is required from MoEF.
Also, please remember that environmental clearance is required to be obtained before commencement of any construction activity.
NOC from Airport Authority of India
With a lot of construction coming around airport in many cities in India
Plinth Completion Certificate
Once work commences on the site and is completed up to the plinth level, the developer has to submit a proposal for Plinth completion Certificate to the local corporation. The local corporation after verifying the construction work done on site up to the plinth level may either accords plinth completion certificate & permit to carry on further construction work as per approved plans & conditioned mentioned in CC or refuses to grant plinth completion certificate, if any deviations found than the approved plan. In such cases notice are given to stop further work and to get the revised plans approved.
Occupancy Certificate and Certificate of Completion
Occupancy Certificate evidences the completion of the building as per the approved plan and compliance of local laws. Without the Occupancy Certificate, it is difficult to get the water and sanitary connection. The Occupancy Certificate allows the developer to occupy the building but is not considered a final document because it still requires the Certificate of Completion. The Completion Certificate is considered to be the final document to fully occupy the building and connect to utilities.
