A house without Occupation Certificate is sold at 15% Lower than the Market Price..

A house without an occupation certificate is sold at 10% to 15% lower than the market price

There were many attempts to regularise unauthorised buildings across India.

Two Flats Merged  Without Permission: The Lessons from the Campa Cola Crisis..

By Mr. Neha Pandey Deoras & Yogini Joglekar

An errant builder does not lose anything but the property buyer could lose everything. Do not get trapped in an illegal house

In  the year 1991, Ms. Nandini and Mr. Ajay Mehta bought an apartment each and then merged the two, for a 1,300-sq ft plush flat on the 10th floor in the Midtown Apartment tower of the Campa Cola compound in the Worli area of Mumbai.

The Mehtas run individual businesses from their offices in Worli. At the time, builders PSB Construction, Yusuf Patel & BK Gupta had promised the couple and many of their neighbours that they would soon get the occupation certificate (OC).

Today, both the Mehta flats have been termed illegal. Of the three builders, two are no more; the third refuses a helping hand. The Mehtas had bought the house on a loan taken from a leading private bank, which they repaid some years ago.

Back then, banks disbursed home loans without an OC; now a borrower has to produce one and, at times, also the blueprint or  / layout of the building to get a home loan.

Unfortunately, the 100 odd flat owners of this society never got the OC, though the society has a clear title deed.

In 2005, the Brihan Mumbai Municipal Corporation (BMC) issued the first demolition notice, to residents who owned flats beyond the 5th floor of each tower. The residents got a stay order from a court; in 2010, the court ended the stay order.

The case went on and in 2013, the Supreme Court permitted the residents to approach the BMC for help, which the municipal body denied. November 11, 2013, was set as the date for demolition.

Ms. Nandini, who has not attended work & is running from pillar to post to save her house, says their flats were sold at the prevailing market rate; mostly, a house without an OC is sold at 10% to 15% lower than the market price. And, municipal bodies charge 20% to 25% more than the retail rates for water and electricity supply.

Today, the Mehtas and many of their neighbours have nowhere to go. Of the 100 odd flats set to be demolished, many belong to senior citizens who are surviving on pension income and not all might be able to afford an alternative accommodation.

Illegal constructions are rampant in Mumbai & probably in many other cities. So, is selling or buying a home without an OC. Property experts say it works on the chalta hai or  / ho jayega premise.

In 2010, a government survey indicated around half of the close to 5 lac unauthorised constructions in the Thane district of Mumbai alone were on government land, including 500 odd acres of Maharashtra Industrial Development Corporation (MIDC) land.

In 2005, a survey found the Mumbai suburb of Ulhasnagar had a little over 1 lac  illegal buildings.

In the same year, the high court (HC) ordered Ulhasnagar Municipal Corporation (UMC) to demolish 855 unauthorised ones.

In 2006, the Maharashtra government stepped in and enacted a special law regularising unauthorised structures constructed prior to January 1, 2005.

Even buildings that violated fire & structural safety norms were allowed to be regularised but for a premium. Citing this example, there were many attempts to regularise unauthorised buildings across India. The HC had then said UMC's case should not act as a precedent for other corporations.

In 2006, the HC asked the Kalyan-Dombivli Municipal Corporation to act against some 67,000 illegal structures. The state government proposed a special law for the KDMC area but the HC restrained the state. Other areas around Mumbai like Thane have a large number of illegal constructions, housing hundreds of thousands. Earlier this year, Union agriculture minister Sharad Pawar said these buildings should be regularised, as done in Ulhasnagar earlier.

Nandini argues that when the builders had paid a penalty for the illegal parts during the construction period, how could the authorities issue a demolition notice? As on date, the Supreme Court has given time to the flat owners till May 2014 on humanitarian grounds.

However, property lawyers opine that merely paying a penalty doesn't mean the buildings has been regularised. The penalty was collected purely for the wrong doing.

There is no denying that the Campa Cola residents' case is weak. Explains Mr. Anshuman Jagtap, Advocate, Hariani & Company:

"The very fact that the residents do not possess an OC makes their case weak. Second, they are trying to buy time from the apex court by asking it to extend the demolition date, while indicating they are ready to vacate the flats."

Property lawyers say there is no point in fighting the case on emotional grounds. The residents can rope in the BMC officials, state government and the builders who are responsible for this situation. While the builders flouted norms despite being fined, the BMC did not follow up the case beyond a point.

"The Campa Cola residents can claim for damages for their losses if their homes are demolished. There are chances the residents can get their flats' resale value to an extent if they ask for it. The residents can also ask the state government to accommodate them in the vacant Mhada flats," says Mr. Jagtap.

Buying a house is a cherished dream and involves saving with your teeth. You would not even want to imagine a situation such as the Campa Cola Compound. Therefore, be careful when buying one.

Lawyer Ms. Sandhya Sondhi says there are many things buyers can be careful about. For instance, ask if the builder / promoter has clear title deeds for the property on which flats are built.

For this, you could ask the builder for an Intimation Of Disapproval & a Commencement Certificate which makes it clear that the property you are purchasing is built on undisputed land and is BMC-approved. In case the builder can not provide an OC at the time of possession, ask for the reason(s).  Most commonly it is because the builder / promoter has over-used the floor space index (FSI) he/she was permitted or there is deviation from the approved plan.

You can identify violations early on. While the Campa Cola case was a glaring divergence, some violations might be small & difficult to detect.

Like consumption of excessive FSI, the building being higher than permitted, flouting of Coastal Regulatory Zone (CRZ) and air space regulations, projects built without environmental clearances &  illegal utilisation of mandatory open spaces around buildings.

Therefore, property lawyer Mr. Vinod Sampat says it might be a better idea to buy a completed house than an under-construction one. It would also help to visit the municipal office & get clarity on title of the plot, exact land use under the development plan and zoning requirements. This will help ascertain the authenticity of the approvals, NOC from CRZ, air space, defence and proximity to hazardous industries and so on. The agreement given by builders or promoters need to be vetted by lawyers to ensure it is clear of any non-compliance.

Not everyone can do all the homework required before making the big decision. Therefore, it is advisable to approach lawyers who help with homework on housing projects. If you can not afford a lawyer alone, you could do so in a group, to cut on the cost. Group home buying sites such as Pune-based Home Buyers Combine and Mumbai-based Groffr.com also offer such services if you buy through them.

JUDGE'S WORDS IN ULHASNAGAR CASE

"Either we have an urban development law or / illegality. If you want illegality, throw the law into the sea. The state is not only a mute spectator but a collaborator in this huge scandal. The law makers are protecting the law breakers here. Is the government so impotent that it can not take care of the law & order situation and demolish illegal buildings?"

Src: BS