WHY OCCUPANCY CERTIFICATE IS IMPORTANT

What is Occupancy Certificate? Why Occupancy Certificate is a very important document? Who issues the Occupancy Certificate? What if the same not obtained?

These are the questions occur in mind of a flat buyer while buying a flat either in a building constructed by the Developer or in a redeveloped building.

Occupancy Certificate evidences the completion of the building as per the approved plan and compliance of local laws. Local bodies like MCGM issue Occupancy Certificates. Without the Occupancy Certificate, it is difficult to get the water and sanitary connection. The Banks and Financial institutions do not sanction loans against the flat unless the Occupancy Certificate is not issued by the concerned authorities.

Obtaining Occupancy Certificates is an essential requirement under the MOFA (Maharashtra Ownership Flat Act) and the flat buyers cannot legally occupy the same, unless the Occupancy Certificates is obtained by the Developer. If the flats are occupied by the buyers without Occupancy Certificate, the Mumbai Municipality can ask for eviction of their flats or have heavy penalties levied on them.

There are instances where the Occupancy Certificates are delayed or not issued on account of violation of building laws which are increasing day by day. Though the buyers have spent their life time hard earned money on the project with a dream of owning a flat, they could not occupy the flat for want of Occupancy Certificate. They suffer for none of their faults and the Developers dilly dally the satisfactory explanation for failure to procure the Occupancy Certificate.

Developers having soft connections easily manage to escape through various loopholes in the law. Having invested precious money in such buildings and after waiting for many years to get an occupancy certificate, the buyers occupy the houses for fear that they may lose the property. Instead of losing their long awaited property, they prefer to occupy the flats without power, sewerage connections and pay twice the water charges and a higher property tax.

The ill-observance of MRTP/MCGM/DCR rules and guidelines are overlooked by the sympathetic officials of the MCGM and the plans so submitted, are sanctioned without verifying the eligibility or its conformity with the Development Agreements.

At times, the Projects are completed and the Occupancy Certificates are issued without the proper inspection carried out by the MCGM officials or taking pains to verify whether the actual measurement of the constructed areas tally with the final plans submitted.

The only solution to this negligence, the Ward Officer and Building Proposal Officials should be held accountable when buildings are occupied without Occupancy Certificates. Also, on grounds of criminal negligence by a Public Servant, the Officials can be made to compensate from their pockets.

Obtaining the approval of the plans has become just a casual affair. During the boom period, one of the Developers constructed several houses and flats with no fear of violating building rules and regulations. He grossly deviated from the approved building plans and went on to construct. The Civic Authorities refused to give Occupancy Certificate despite best efforts of the Developer.

The flat buyers on the assumption that things were happening to their satisfaction, performed house- warming ceremonies and took possession of the flats. When they were about to move in, the scandalous Developer revealed the shocking news that even though he had constructed the apartments and houses to their liking, the Civic Authorities were not issuing Occupancy Certificate on one pretext or the other.

Another Developer constructed small flats aiming the middle income group. However, the Civic Authorities refused to issue Occupancy Certificate due to blatant deviation from the approved plans. In this case, the Developer got the plan approved for construction of 4 dwelling units – 2 on the ground floor and 2 on the first floor whereas he, Instead of constructing 4 dwelling units, constructed 6 dwelling units. The buyers who have invested in the flats are now desperate, as they would lose their money and the flats if the Civic Authorities decide to demolish the unauthorized structure.

The Authorities issue Occupancy Certificate only after completion of the entire construction as per the rules. The Financial Institutions are refusing to lend in absence of Occupancy Certificate or No Objection Certificate from the Civic Authorities.

The net result is that not only the Developer is losing money as many flats remain unsold but also the buyers who have purchased the flats, have to pay interest to the Financial Institutions. The Financiers too face difficulties in getting back the loan installments.

The Civic Authorities are to be blamed as their Inspecting Officers do not carry out periodic and surprise checks at the construction site. In case of deviation they should take the Developer to task in the beginning itself and not at the end of the construction.

Few of the reputed Developers follow the rules and regulations; but majority do not. They dishonor all the laws framed by DCR, MRTP, MMRDA, MCGM etc.

The ill fate of Mumbaikers is that the MCGM has recently admitted its ignorance about how many buildings in the Mumbai possess an Occupation Certificate and how many do not. A Senior Civic Official confessed that Corporation does not have any up-to-date data. He further added that the Country's Premier Civic Body does not have a system in place to track the Developers who violate rules and hand over possession to buyers without first procuring the mandatory Occupancy Certificate.

The buyers are also to be blamed as they do not check the background of the Developer and his track record, nor they check before taking possession whether the building is according to the sanctioned plan and the amenities provided are according to the Sale Agreement. As per the law, one cannot enter a flat or building without receiving an Objection Certificate.

As per the norms of Building Proposals Department, action can be initiated against such occupants by slapping a notice under Section 350 (A) of the BMC Act for occupying premises without an Objection Certificate. It is must for any flat buyer to inspect and verify all the required documents or else, face various problems at a later stage.

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FUNGIBLE FSI – VIDEO INTERVIEW GIVEN BY THE AUTHOR DILIP SHAH TO LEGALPANDITS.COM

http://www.youtube.com/watch?feature=player_detailpage&v=bHVw4ioYSGg

FSI is the ratio of permissible built-up area vis-à-vis the land size. For example, if the land size is 1,000 sq ft and if the FSI granted is 2, then one can construct twice the plot size, i.e. 2,000 sq ft. Anything over this is either illegal, or requires special permission from the Civic Authority. 

What is fungible FSI? 

Fungible FSI means a compensatory FSI permitted in lieu of flower bed, niche area, private terrace, ornamental elevation area etc in the flat to be constructed by the developer / land owner. The word ‘fungible’ suggests something that is freely exchangeable or replaceable, either in whole or in part. This means, Fungible FSI if not used in various features above, can be used to build bigger habitable carpet area of flat.

What has caused the amendment in DCR this concept of fungible FSI is brought in? 

Earlier, the developers used to build about 30 to 40 per cent more as ‘free-of-FSI’ space which was popularly known as ‘super built-up’ or ‘saleable’ area. However, in both the cases, the developer used to charge the buyer for every inch of this external space at the same rate as that of the flat.

For example, one such developer builds 40 per cent additional space over and above the flat size of say 800 sq ft carpet area i.e. 320 sq ft aggregating 1120 sq.ft identified as built up area. If the rate is Rs 20,000 per sq ft, he would earn on entire built up area, an additional Rs 64 lakhs whereas in reality, the buyer get only 800 sq.ft as habitable carpet area. One can easily calculate the profits the developer stands to make from every other flat.

Now, under the DCR amendments, these features are no more available free of FSI.  

Please explain the difference between earlier DCR provisions for FSI and fungible FSI provisions after amendment.

Prior to the said Notification, areas covered by balconies, flower beds, individual terraces, ducts, voids, niches, refuge area, new or additional lifts, staircases, swimming pools, fitness centres in Cooperative Housing Societies, sun decks, clubhouse, ornamental projections etc., were not included while computing FSI. Thus, these areas were known as "Free of FSI". Similarly, according to the new DCR Amendments, balconies, flower beds, terraces, voids and niches would now be counted in the Floor Space Index (FSI).

Now, under the DCR amendments, these features are no more available free of FSI. A specific premium is charged which is based on the market value decided by the state government and is levied at 60 per cent premium for Residential, 80 per cent for Industrial and 100 per cent for Commercial at the Ready Recknor Rates.

How does one calculate the fungible FSI?

The Fungible FSI is calculated on Built-up area of flat.  In suburbs, private buildings get 2.7 FSI including fungible and in cess buildings and slums, the FSI of 4.05 (335% of 3) including fungible will be available. The fungible FSI can be included in the flat and thus the area of the flat goes up. 

Why the redevelopment activities are excused from paying premium for this compensatory FSI?

There is no impact of this Fungible FSI method in projects under redevelopment. The Developer will not have to pay premium on the area used by the existing member while giving him space in the Redeveloped Project. He is free to use TDR option. Fungible FSI on the FSI already consumed in the existing buildings will be available free of premium.

The new DCR rules do not apply to cessed, non-cessed old buildings, MHADA layouts, chawls and slums undergoing redevelopment. This would mean waiver of premium for buildings meant for rehabilitation. The Fungible FSI for the saleable component of these structures will, however, be governed by the new rules.

 How does this concept avoid misuse of FSI by builders?

The primary motive of bringing in transparency and eliminating the ambiguity that was largely prevalent earlier with respect to disproportionate saleable area. There was no limit of construction that was possible earlier. MCGM modified the Development Control rules, restricting the same to 35% for the residential area and for commercial area 20% of the permitted FSI including TDR.

In what ways this provision brings transparency in?

Although certain areas as mentioned above were "Free of FSI", the same were included in computing area of a flat by Builders/ Developers and sold to the consumers at a market price under the garb of Super Built Up area or Useable area or Saleable area of a flat, or by whatever name given. These areas, under the name of Super Built Up area or Useable area or saleable    area, were included in the area of the flat while selling the same to the consumer.

Thus, by envisaging a compact plan where all areas are now included for the computation of FSI and a cap of 35% is fixed in case of the residential projects so that there is no room for the Builders or the Developers to manipulate the rules by creating excess non-habitable areas and overcharging consumers. Fungible Compensatory FSI may also be used to construct larger dwelling units and/or to construct additional dwelling units. Hence, it may be used in the same manner as regular FSI.

Since the "Free of FSI" areas are now included in the computation of FSI, thus bringing in greater transparency. Builders/ Developers will have to pay a premium for availing Fungible Compensatory FSI. This will curb Builders/ Developers from making exorbitant profits at the cost of consumers.

Will this provision help in expediting clearance of projects and in what way?

There are numerous departments to whom the developers have to approach to seek permissions, clearances and certificates and I do not think a single factor of DCR amendments would encourage an early clearance of projects. The time frame though fixed by the authorities is not adhered to on pretext of one reason or another.

How is this concept going to benefit the home buyers?

The confusion of ‘super built-up’ and ‘saleable’ areas is no longer there and the buyer knows exactly what is he paying for. In addition, the entire transaction is recorded officially in the agreement, and the buyer is relieved of blackmail by the developer. The said amendments will enable consumers to calculate the total area of the flat / unit sold to them and the exact price they pay for such area.

Black money transactions would reduce, which also means a reduction in the black money payment component for the buyer.

How the Fungible FSI provisions are going to affect the realty market? Do they prove to be boon or bane for the current market situations?

Under the existing DCR, including many areas the passage, lifts and staircases are charged with premium paid, which, earlier was given free of FSI and within the power of Municipal Commissioner. It is not going to benefit the builder fraternity as it has to pay premium and it will be additional cost and burden which ultimately transfers to the buyers of residential and commercial premises.

Developers used to provide elevation features (balcony, flower beds etc) in the past without paying any premium to the government. As per the new policy of fungible FSI, a developer has to pay for balconies and flower beds. So, instead of a balcony, developers are increasing the size of the house to increase their revenue. However, as a result, the character and beauty of the city shall gradually be lost. Most buildings will be block- like structures similar to MHADA buildings.

Under the new norms developers will have an option of 25% more parking over the DCR limit without premium and without being counted in FSI.

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CAUSES OF CONSTRUCTION DEFECTS IN REDEVELOPMENT OF HOUSING SOCIETY 

The reasons and causes of construction defects in Redevelopment Projects are attributed to numerous reasons. The redevelopment activities of old housing societies and tenanted buildings are going up at such a rapid rate that Builders and Developers now resort to unhealthy modus operandi of discounting on various costs by cutting corners whenever and wherever they can by compromising on brands, material, fixtures, providing the non-agreed amenities and facilities and least bothered about the welfare of Society and its members.

Construction defect liability generally is based on the decisions the Builder and/or Developer makes. First, they are in the position to decide what construction strategy they will use. The need to analyze the soil and prepare it adequately before breaking ground to build is an example of a decision.

Improper soil testing may lead to cracks in the stucco, walls, retaining walls, garage floor, pavements and elsewhere. The fix is very costly and very intrusive. Unfortunately, the reality is reprehensible soil analysis and preparations happen all the time.

The most important factor in any project of redevelopment is its infrastructure. Let us find the causes of these evil features. Everything from soil analysis and preparation, to construction deficiencies or poor workmanship can be the cause for a construction defect. Construction defects are costly and can lead to a house collapsing, floor damage, and various other problems.

One of the first steps in a building project is to perform proper soil analysis and preparation. Soil not properly analyzed can have damaging effects on a structure.

Using defective building material can be the prime cause of many construction defects in a structure. The defective roofing material allows water to leak into the structure. The result could be a number of defects leads to damaging the wall and ceilings of flats beneath.

Defective building materials can be a root cause of many building issues or construction defects. If a highly-skilled contractor builds a roof with defective building materials, it doesn't matter how good his workmanship is. The roof will be a construction defect.

Negligent construction is an unfortunately common occurrence. A builder has to be very careful when choosing a contractor or subcontractor. A builder will sometimes use one contactor for various projects.  

Sometimes the cause for construction defects can be the result of bad workmanship. The workers doing the actual building work are negligent in their construction duties and contractors/site supervisors do not remain attentive to their duties. This can be the result of a PMC not overseeing the building process as he should or simply not caring about the work being done.

At other times, it could be a contractor or subcontractor cutting corners to save time or money on a job. While cutting corners can work out to the contractor's advantage, it can result in a construction defect in the structure in a short span of couple of years.

The architect designs a structure that is aesthetically pleasing yet with structural deficiencies that leads to defects later. Under the circumstances, other professional architect should also evaluate the design for flaws before the design is implemented in a structure. However, some design flaws are not evident until the structure is built.

One important area is the area of building materials and/or products they use in the house. This could be appliances, plumbing equipment and dry wall material etc. This also goes for the contractors they choose to deploy in the project. This is clearly based on their qualifications and whether they are licensed or not. Poor workmanship coupled with inferior or cheap material frequently causes construction defects.

If you suspect that you may have a construction defect in your home, you need to document the issues you are experiencing. This would include taking pictures of any noticeable defects inside and outside your house.

You need to determine how severe the construction defect is to know whether or not you should take steps to repair it or if you can wait until you have taken up the matter with the Society. You need to consult an expert to know exactly what steps you need to take to come to the best resolution to your potential construction defect issues.

There are a lot complaints received by the Societies with regard to defective building materials, negligent construction, substandard workmanship, design deficiencies or material deficiencies.

The priority is to get your house back to a liveable and safe condition. This can be an arduous task for the Societies to have vigilant approach over the personnel that is deployed by the Developer for redevelopment. Any lethargy or lack of interest over your own project of redevelopment can cause irreparable loss resulting to never ending conflicts and encounters between the Managing Committee and the members of the Society.

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WHAT IS REFUGE AREA IN HIGH RISE BUILDING?

Refuge areas are such areas in a building where people can take shelter in case of a fire. These areas are often misused by Developers who surreptitiously convert them into habitable areas. Many Builders are known to sell these areas to buyers who then illegally utilize them as part of their apartments.

May it be commercial or residential; the buildings with the height of nine floors in Mumbai city shall be categorized under high rise buildings. The buildings which fall under high rise category shall have to follow certain building norms and fire safety regulations. Also, the Terrace Floor of the building will be considered as “Refuge Area”

Now a new set of guidelines, which form part of the modified Development Control Rules notified by the State Government, lay down stringent provisions for fire-fighting and curb misuse of these areas by Developers. The Notification has been issued by the State Urban Development Department to streamline building approvals system and prevent Builders from manipulating and misusing certain portions of their towers.

The new Rules stipulate that a Refuge Area will have to be provided at every 7th habitable floor after the first 24 meters of the high rise building. The Refuge Area shall be provided within building line at floor level. In case of high rise buildings having height more than 30 meters, the first Refuge Area shall be provided at 24 meters or 1st habitable floor, whichever is higher. Thereafter, the Refuge Area shall be provided at every 7th habitable floor.

The guidelines stipulates that a Refuge Area will now be restricted to just 4% of the habitable floor area it serves and will be free of Floor Space Index or FSI, the ratio of permissible built up area vis a vis the plot size. If it exceeds 4%, the excess area shall be counted in the FSI. In the past, Municipal Commissioners were notorious to sanction entire floors as Refuge Areas which the Builders would then misuse it for commercial gain. In an upcoming landmark residential tower near Worli Naka, the BMC sanctioned a Refuge Area of 550 sq.ft outside every apartment thereby raising eyebrows about its possible misuse in the future.

For buildings having height up to 70 meters (about 24 floors), as an alternate, Refuge Areas can be provided as reinforced cement concrete (RCC) cantilever projections at the alternate mid-landing level of staircase free of FSI. Each Refuge Area at mid-landing shall have a minimum width of 3 meters and minimum area of 10 sq. meters for residential and 15 sq. meters for non-residential buildings.

Under the new law, in high rise buildings with up to 30 meters height, the terrace floor of the building shall be treated as the refuge area. The Fire Check Floor in a building having height more than 70 meters shall have to be mandatory. It will cover an entire floor at every 70 meters level. However, the height of the Fire Check Floor will not be allowed to be more than 1.8 meters to check its misuse. It will not be used for any purpose and it shall be the responsibility of the owner/occupier to maintain the same, clean and free of encumbrances and encroachments at all times.

The Refuge Area shall have a door which shall be painted or fixed with a sign in luminous paint mentioning "REFUGE AREA". The lift/s shall not be permitted to open into the refuge areas, it said. The rules further stated that refuge areas will be designated exclusively for the use of occupants as temporary shelter and for the use of Fire Brigade Department or any other Organization dealing with fire or other emergencies and also for exercises/drills if conducted by the Fire Brigade Department.

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