OC in Sale Agreement + Is it a safe option

[paramrsa83]

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 there is a penthouse, 2 flat units, Gym and Club house which are violations 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 approval for the TDR yet.

Following are few facts / current state:
1. There is no TDR approval. TDR is a state where government acquired some of the builder land for road widening and allows the builder to construct extra units (usually another floor).
2. Approval for updated plan. Here is the complication. the old plan is G+3. The new plan is G+4. Now, The process to get G+4 approval is little complicated than the G+3.
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 how should I proceed with the sale agreement & registration.

Can I get into the sale agreement & register the property with a clause of getting the OC within a stipulated time by the builder in the sale agreement?
Does this clause really makes sense or is it just a eye-wash? Will this clause assure me the OC?
I heard OC is something only the builder can initiate or obtain. What if the builder abscond (has there been any case)?
Can the builder legally escapes from the responsibility of getting the OC (due to any unknown reasons)?
How long the legal battle can happen before we get OC?
Given that we have registered and occupied the OC will the buyer will be at any risk of legal action by BBMP or court?
In general, what are the other risks with above clause.

Another option for me is to do the registration and wait till OC is issued and then register the property and then occupy the flat. Is this option have any risks? Yes, if the builder didn't get the OC in stipulated time then I have to battle legally to get the agreement amount. But is this option worth to consider?

The ideal option, I am looking is, holding off 20% of total amount and complete the registration. This 20% will be given to the builder once the OC is ready. However, the builder isn't agreeing to this option. Has anyone tried this option or has any builder agreed to this option?

Thanks

[msn1270]

BBMP/BDA will not provide Completion Certification(CC) & Occupancy Certificate (OC) to the deviated buildings from the sanctioned plan.
Legally violation can be regularized by paying penalty, if the violation is not more than 5%. But, Its a common practice among many
developers to promise more and deliver less.

[sriram]

Dear paramrsa83,
The Sale Agreement has very little or NO legal validity once you register the property. The Sale Agreement is valid from the time you execute the Sale Agreement to the time you register the property. After registration, the SALE Deed would be the legal document. It seems to me that the builder is trying to hoodwink people. If at all, you are very keen on going ahead, please enter into Sale Agreement with OC clause BUT please dont register the property. You can register once OC has been obtained. You can pay a higher amount for Sale agreement but please dont REGISTER without OC as it can lead to many complications later on for you. It seems to me even if the builder is serious about obtaining OC it would be a very complicated task with quite some bribes involved. After selling all the flats what is the builder motivation to provide OC ?? And after registering your property, the OC clause in Sale agreement will not have much legal value. Please consult a good lawyer before proceeding.

[paramrsa83]

Hi,
Can I add any clause in the sale deed? How about indemnity clause?


When I checked with my friends / colleagues most of them don't have the OC but they have registered the property. When i enquired about why they registered without OC they told there is no option since the builder is pressing for it.

I am wondering how one would safe guard their investments or themselves with respect to the commitments of builder (on OC or any other promises)?

What is the ideal process or procedure for registering an apartment with proper documentation?

Thanks
Param

[msn1270]

Either you collect the CC+OC and then register or register it without insisting for CC+OC like many others.

Inclusion of any No of Clauses in the sale deed will not add any benefit for you, once you register the property.

Registering the property means, you have accepted it as it is.

Its up to you to decide whether you would like to go with OC+CC or without.

[manja]

BBMP building bye laws say the builder has to apply for the OC within five years after issuing of building construction permit/license.

You can put the clause for Builder to be liable for providing you the "OC by the required date from the relevant authorities.." in your sale agreement and get the Sale agreement registered. Also you get it written in your sale deed too. That will give you some ammunition, in case you need to go legal later on.

Note: If you register your sale agreement, you cannot undervalue your purchase.

[paramrsa83]

Hi Manja,
The issue (which I read) is once the property is registered the sale agreement won't come into the picture. Only the sale deed stands in the court of law. Also, in the sale deed we cannot mention any commitment related to OC. One option which was suggested to me was to have indemnity clause for the following scenarios in the sale deed.

1) Issue with destruction of unauthorized floor by BBMP
2) Any notice related to eviction
3) Covering the cost involved to get the unauthorized floor regularized

I am wondering whether any builder would really agree to above clause.

Thanks
Param

[sriram]

Hi paramrsa83,
You should surely insist on the indemnity clause in Sale Deed if you are very keen on going ahead. That will give you some legal standing. However, please note the indemnity clause is a useful tool in case of known builder since you can take him/her to court and the builder may take care of the violations to save his reputation. However, for small builders you dont know when they close their shop. Their office address itself may change. In that case, the indemnity clause is just of theoretical value.

[paramrsa83]

I tried with the Indemnity clause but the builder isn't agreeing to it. He says they haven't gave any indemnity clause for any tenant so he thinks its not needed.

So, I have dropped out of the property.

However, When I enquired, Most of the big builder in bangalore aren't ready to do the registration after the issuance of OC. They feel getting OC will take time and they aren't ready to wait for the registration till we get the OC.

So, the only option is trust the builder (based on his previous project) and go ahead with it.