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Commencement Certificate

There are a lot of housing terminologies that appear quite technical but are actually easy-to-understand. Commencement certificate is one such term. It’s a document that’s crucial for the developer as well as the buyer.

What's a Commencement Certificate?

As the name indicates, it's a document that certifies the legality of any real estate project. It's issued by the local municipal authority granting permission to the developer to commence construction. It means that the builder has fulfilled all the mandatory legal requirements and thus received a green signal from the authorities for proceeding with the project as per the approved building plan.

Why is a Commencement Certificate Required?

Without a building commencement certificate, a developer cannot carry on the construction. For obtaining a commencement certificate, the developer has to submit building plans to local municipal authorities. They will then conduct several inspections and then decide whether or not the project can be started. While submitting the building plans, the developer is also required to furnish all no objection certificates and clearance certificates from various departments like water, electricity, waste disposal etc.

What are the Required Documents?

  • Tax receipts

  • Valid photographs

  • NOCs from various departments

  • All documents related to property site

How is the Commencement Certificate Issued?

Issuance of building commencement certificate involves two stages. First the certificate is given only up to the area of the plinth and then for the remaining superstructure. Once the inspection is conducted by the municipal authorities, the commencement certificate is given. After obtaining all the necessary licenses and approvals for the project, the developer gets a nod to go ahead with laying the foundation of superstructure and delineate the boundaries. According to new guidelines by RERA (Real Estate Regulatory Authority), a project without commencement certificate cannot be RERA-authorized.

Why is a Commencement Certificate Necessary for Home Buyers?

Since a project is green flagged only after the developer receives the building commencement certificate, knowing about it is essential for the interests of the buyer. If he invests in a project without checking for its commencement certificate, there are high chances that the project may get indefinitely stalled or even aborted. A buyer should duly check the commencement certificate not only for the whole project but also for the floor where he wants the flat. If the builder willingly furnishes commencement certificate for the building but is reluctant to do so for a particular floor, then it means the status of the floor is disputed and if constructed it would be illegal.

Any property without a building commencement certificate is considered illegal. So, if the buyer proceeds to buy without checking the status of the commencement certificate, he will be owner of an illegal property and may have to face lawsuits in the near future. Commencement certificate validates that there are no pending dues against the property. It's also a proof that all the required clearances from various government departments have been issued.

What's the Commencement Certificate Procedure?

  1. The developer will have to send the application to the local municipal authorities along with a building plan that depicts correct dimensions, land schedules, building size, building positioning. All other required documents will also have to be submitted.

  2. Once the municipal authorities receive the application, it will release a receipt of acknowledgment.

  3. Application and all submitted documents will be thoroughly scrutinized to check if there's any conflict with laws and regulations.

  4. Once the verification is done and subject to property inspections, the municipal authorities decide whether to grant the commencement certificate or not.

Types of Certificates

Other than the building commencement certificate, there are two other certificates that should not be confused with it. These are:

  • Occupation Certificate: 

It's a certification provided by municipal authorities to the owner of the property(buyer) entitling him to use amenities regulated by the municipality like roads, water, sanitation, power supply etc. Know in detail about Occupancy Certificate.

  • Encumbrance Certificate:

Encumbrance certificate reveals whether or not there are any financial liabilities associated with the project. It has got nothing to do with the legal status of the property.

  • Completion Certificate:

Just like commencement certificate is needed before beginning a project, completion certificate validates that the completed building has been made in accordance with all the government rules and doesn’t breach any laws.

To Wrap Up

Commencement certificate is a vital document, thus all home buyers should check whether the builder has it or not. If the buyer buys a property that doesn’t have a building commencement certificate, he will be legally liable as the owner of an illegal property. Also know more and apply for Home Loan at Finserv MARKETS

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