Table of Contents
- Commencement Certificate in Real Estate #1: What is a Commencement Certificate in real estate?
- Commencement Certificate in Real Estate #2: Who all can apply for the Commencement Certificate?
- Commencement Certificate in Real Estate #3: Procedures and Planning for the issue of Commencement Certificate
- Commencement Certificate in Real Estate #4: List of documents required for obtaining a Commencement Certificate
- Commencement Certificate in Real Estate #5: Steps to obtain a certificate of commencement
- Commencement Certificate in Real Estate #6: Significance of Commencement Certificate for a house buyer
- Commencement Certificate in Real Estate #7: How is a Commencement Certificate different from other related certificates?
- Commencement Certificate in Real Estate #8: New updates related to Commencement Certificate
- Commencement Certificate in Real Estate #9: How can you record the Notice of Commencement?
Are you someone who has heard the term “Commencement Certificate” multiple times when it comes to real estate but doesn’t know its meaning? If yes, then you will get to know everything about the Commencement Certificate here. In this guide, we will tell you the meaning of the Commencement Certificate, who can apply, how to apply, significance, and much more.
So, keep reading this guide till the end to know everything about the Commencement Certificate and its related aspects.
What is a Commencement Certificate in real estate?
A Commencement Certificate is a document that proves the legality of the real estate project. This certificate is issued by the local municipal authority allowing the developer to start the construction project. The authority grants the Commencement Certificate only after the developer has successfully met all the legal requirements and received approvals for the layout and plan of the building. Even though the RERA Act 2016 has made it mandatory for the developers to attach the Certificate of Commencement while applying for the registration of the real estate project.
As the Commencement Certificate holds importance for the developers, it is crucial for the homebuyers as well. Because, if the homebuyers know the importance of a Commencement Certificate, they cannot be fooled by any developer. Every homebuyer must know that until the developer receives the Commencement Certificate for a real estate project, the developer is not authorized to begin the construction.
Therefore, if the developer does not have the Commencement Certificate, then it’s a clear indication that the buyers or investors should think twice before investing in such a project. The investors and buyers of the property must also cross-check whether the Commencement Certificate procured by the developer includes the floor on which they are willing to purchase the property. Owning a real estate property without this certificate could be illegal to own.
Who all can apply for the Commencement Certificate?
One of the most common questions that people are generally confused about is – Who can apply for the Certificate of Commencement? Well, we’re here with an answer.
The developer or the builder who has acquired plan sanction of the said real estate property can apply for the Commencement Certificate.
Procedures and Planning for the issue of Commencement Certificate
The procedures and planning for issuing the certificate of Commencement vary between one local authority to another, however, the basic procedure is:
The local Municipal authority will receive the application of Commencement Certificate along with a plan drawn to a scale of 1:100. This plan reflects the dimensions of the land, size of the proposed building, schedules of the land along with the position of the building upon the plot accompanied with necessary documents.
After receiving the application for the Commencement Certificate, the local authority will issue the receipt of acknowledgment.
Later, the application and the documents will be verified in order to check if the proposed building adheres to local regulations and laws.
Once the verification is completed, the concerned authority may grant or reject the Commencement Certificate.
In case the local authorities find the submitted building plan is as per the local regulations and plot records, the applicants will be asked to pay the prescribed fees.
Once the applicant remits the fees, the concerned authority will issue the certificate of Commencement.
List of documents required for obtaining a Commencement Certificate
For obtaining a Commencement Certificate, the developer is required to submit the application for Commencement Certificate along with some documents mentioned below:
The latest receipt of the tax paid
Letter of NOC from all the respective government departments
All the property-related documents
Make sure to carry all the documents in order to obtain the Certificate of Commencement without any hassle.
Steps to obtain a certificate of commencement
Are you wondering about the process of obtaining the Certificate of Commencement? If yes, then you don’t need to wonder anymore as we are here with a step-by-step guide on how you can obtain a Commencement Certificate without any issue.
Step 1: The builder or developer must submit the plan of the real estate project to the concerned local authority as government officials will conduct multiple preliminary checks and inspect the entire property. All this is done to make sure that the project is completely fit for commencement.
Step 2: In addition, with the project plan, the No Objection Certificate or NOC received from multiple government offices is required to be submitted to the local authority. The developer is also required to show proof of having obtained clearances from all the relevant departments like water, fire, electricity, or sanitation.
Step 3: The Commencement Certificate is issued to the developer in 2 stages- firstly, up to the plinth area and secondly for the superstructure.
The developer receives the Commencement Certificate on the basis of the findings of the inspection done by the engineering and town planning departments. After obtaining all the necessary licenses and sanctions for the real estate project, the developer lays the foundation of the superstructure and starts building the boundaries of the project.
As per the updated RERA guidelines, a valid Commencement Certificate is a mandatory document for a real estate project to be considered as RERA-approved.
Significance of Commencement Certificate for a house buyer
Every document or certificate in the real estate world holds some significance to both the buyer and owner. It is always vital to cross-check all the documents before you finalize the deal of buying a property. A failure to do so may cost you a fortune later.
Although the certificate of Commencement is obtained by the developer it still holds a lot of significance for the house buyers as well. Until a developer obtains the Certificate of Commencement for initiating the real estate project, he is not authorized to begin the construction work. Therefore, a house buyer must not invest in such a project that is not yet legalized by the local authorities.
A home buyer must always examine and confirm whether the Commencement Certificate that the developer has includes the floor on which he/she wishes to purchase a property. If in case, you were ready to buy a property in a real estate project that does not have a valid Commencement Certificate then you come into the risk of being the owner of the illegal property. This thing not only affects your legal title to the real estate property but also demands you to pay the related fines for buying an illegal property.
Just like Occupancy and other related certificates, a Commencement Certificate is crucial as it makes sure that a buyer is purchasing a property that has met all the legal formalities. It secures your title over the property and protects you from all possible legal risks in the upcoming future.
Apart from this, listed below are some of the other reasons why obtaining the Commencement certificate from the developer is important:
The presence of a Commencement Certificate proves the legality of the property and ensures that the land is dispute-free.
The certificate ensures that you’re a secured owner of the property with clear dues, title, and clearances.
The Commencement Certificate saves you from all the possible legal consequences that might happen in the future because the concerned authorities hold the right to penalize a person who is the owner of the illegal property.
Listing of a residential unit in the Commencement Certificate proves that you’re purchasing a legal housing property.
Most of the time, it is often seen that the homebuyers, especially the beginners, repeatedly confuse the Commencement Certificate with other related certificates like Encumbrance Certificate, Occupancy Certificate, and much more. However, there is a difference between all of them. So, if you are also new in the journey of buying a home and want to know the difference between all these certificates then this section has got you covered.
Here, we have differentiated the Commencement Certificate with 3 other certificates namely Occupancy Certificate, Encumbrance Certificate, and Completion Certificate.
1. Commencement Certificate Vs Occupancy Certificate
The certificate of Commencement is a document issued to the developers, permitting them to start a construction project. This certificate proves the legality of the project and is essential to begin the construction of a housing project.
Whereas, the Occupancy Certificate is offered by the governing civic body or the local administration for making the owner of the property eligible for obtaining amenities provided by the local municipality. These amenities involve road, water, electricity, sewage, and sanitation.
2. Commencement Certificate Vs Encumbrance Certificate
A Commencement Certificate is a legal document that is issued by the local Municipal Corporation, under the RERA Act. This certificate provides the permit to a developer who wants to commence a construction project. In other words, we can say that the certificate of Commencement proves the legality of the real estate project.
Conversely, the Encumbrance Certificate reveals any liabilities associated with the real estate project like existing loans. In short, an encumbrance Certificate shows that a particular project is clear of all the liabilities.
3. Commencement Certificate Vs Completion Certificate
Last but not least, the final difference that we are focusing upon is between Commencement Certificate and Completion Certificate. The Commencement Certificate is the certificate from the concerned Municipal authority permitting the builder to initiate or start the construction of the property after making sure that all set criteria have been met.
On the other hand, the Completion Certificate is a legal document that confirms whether a specific real estate property is completed or not. It also indicates that the structure of the specific property is not breaching any local regulations or laws set by the government.
This was just a brief on how a Commencement Certificate is different from other related certificates. Let’s now move ahead and get some knowledge about the updates related to the Commencement Certificate.
UPDATE: Redevelopment projects to be finished by MHADA within three years of acquiring Commencement Certificate.
The Maharashtra cabinet in August 2020 cleared the project to speed up the redevelopment of cessed buildings within Mumbai through Maharashtra Housing and Area Development Authority i.e. MHADA. As a consequence, if the MHADA takes up the redevelopment then it must be successfully completed within 3 years of obtaining the Certificate of Commencement. Following this update, at least 14,500 cessed buildings are set to take advantage.
How can you record the Notice of Commencement?
To record the Notice of Commencement, you must keep certain points in mind that are as follows:
All the information must be understandably typewritten or printed.
It is compulsory to attach a Payment bond to the instrument if in case, line 5 applies.
The first, second, third, and fourth lines must be filled in always.
Make sure to read the “Warning to Owner”.