It is extremely important to ensure that your developer has all the necessary permissions and documents in place. Experts say that delay in getting approvals is among the major causes of project delays.
Then there’s the fact that you may spend a lot of time and energy on deciding on a suitable home. When you apply for a loan, your application could get rejected because the developer does not have all the necessary permissions, a fact that gets highlighted when the bank carries out its own due diligence.
Let us look at the various permissions that the developer must obtain at various stages of the project:
This is the stage when the developer has just bought the land. He then starts selling apartments within the project to select investors, at a much-discounted rate. Ordinary end-users should not invest in a project at this stage at all. Investors with deep pockets may undertake this risky venture. However, they must ensure that the developer has the conversion order. This is an approval that allows the developer to make non-agricultural use of agricultural land.
Those investing at the pre-launch stage must also ensure that the developer is indeed the owner of the land on which he is developing the property. This means that he should be able to show you the title deed, which should be in his name. This needs to be on stamp paper and duly registered. “If you are not an expert, you may not be able to judge if the title document shown to you is a valid one. Hence, it is prudent to take a lawyer along,” suggests Rajeev Mehrotra, head of Sunshine Consultants, a Noida-based real estateconsultancy.
This is the stage when most end-users and small investors come in. At this point, the developer must have an approved building plan from the civic authorities indicating that the building plan meets the local building bye-laws.
The developer must also have the approved floor plan, which shows where the different parts of the building will be situated. This includes details of the apartments, staircase, lifts, common areas, etc. An approved floor plan indicates that the building meets the specified safety criteria.
The developer must also have no-objection-certificates (NOCs) from the water and sewage board, the electricity board, and the pollution control board. Once the developer has all these above-mentioned approvals, he must get a commencement certificate (CC) from the civic authorities.
If you are buying into a project that is in the ready-to-move-in stage, make sure that the developer has the occupation certificate (OC). Without this document, you may find it difficult to get electricity and water connections. You, or a lawyer you have engaged, will have to ask the developer to present all these approvals. Should there be any hesitancy or excuse on the developer’s part, be warned that something is amiss.
One sign that the developer has obtained most of the approvals is if a few reputed banks are disbursing loans either to the developer or to buyers in the project. “If you find that three or four large and reputed banks or housing finance companies are disbursing loans to a project, it usually implies that they have done their due diligence and found that the developers’ papers and approvals are all in place,” states Sanjay Sharma, managing director, Qubrex Realty, a Gurgaon-based real estate firm. At a time when project delays are rampant, it is best to bet on a developer who has all the permissions.