Empowering Residents: Maharashtra’s New Occupancy Certificate Framework

Under the Real Estate (Regulation and Development) Act, 2016, an “Occupancy Certificate” is a crucial document issued by local authorities, permitting a building to be legally occupied. It confirms that the building meets local requirements for essential services such as water, electricity, and sanitation. Without an OC, a building is not considered fit for legal occupation, and occupying it can lead to legal action, fines, and penalties on occupants.

In reality, many residential buildings in Mumbai and the MMR have been occupied for years without an OC, primarily due to developers failing or refusing to apply for it even after handing over possession and forming housing societies. This has left residents exposed to various risks, including legal, financial, resale, loan, insurance, and redevelopment issues.

Previously, only the developer or owner could apply for an OC. Housing societies had no such right, and their applications were often rejected. This gave developers complete control, which was frequently misused to demand extra payments. If a developer became insolvent, disappeared, or refused to act, residents were left with no remedy.

To address this long-standing issue, the Maharashtra Government introduced a key reform allowing housing societies to apply for an OC themselves if the developer fails to do so. This change aims to protect residents and resolve years of regulatory uncertainty in a practical way.

The Maharashtra Government recently declared a policy for the issuance of OCs for more than 25,000 buildings in Mumbai, constructed under BMC, MHADA, SRA, and similar regulatory laws. Initiated by Mumbai Suburban, this scheme aims to smooth the path for buildings whose OCs got stuck due to technical or administrative hurdles such as minor area differences and setback problems.

Under the new system, housing societies will be permitted to apply for full or partial OCs, either jointly or on their own. Applications submitted within six months will not attract any penalty, although payment of necessary premiums will apply where additional FSI has been utilized. The policy revises and simplifies the OC process, offering relief to over 10 lakh residents through easier compliance, discounts on premiums, and the waiver of penalties for early applicants.

The reform ends the developer’s exclusive control over OC compliance by allowing housing societies to apply directly. It replaces discretionary officer decisions with a clear, policy-driven process, thereby reducing arbitrariness. The reform acknowledges ground realities, as many buildings without OCs are fully built, occupied, and paying taxes, while still ensuring safety checks for structural stability, fire safety, and essential services.

In legal cases such as Sudhakar Ganpat Keer vs. The State of Maharashtra and ALJ Residency Co-operative Housing Society Ltd. vs. State of Maharashtra, the courts have held that occupation without an OC is illegal, criticized the municipal corporation for permitting it, and directed strict action, including eviction, sealing, demolition of unauthorized structures, and proceedings against officials. In Samruddhi Co-operative Housing Society Ltd. v. Mumbai Mahalaxmi Construction Pvt. Ltd., the builder handed over flats without obtaining an OC, forcing residents to pay higher taxes and charges. This highlights how builder defaults harm residents and underscores the need for the reform to protect housing societies.

Mumbai has a large number of old buildings, including pre-1991, MHADA, and cessed properties, where redevelopment is frequently hampered by the absence of an OC. This reform facilitates easier redevelopment and aids in the regularization of compliance for such buildings. Allowing societies to apply for an OC provides a workable alternative compliance route because many older projects are outside the effective scope of RERA. This modification increases marketability, title certainty, and lowers transaction barriers, as an OC is essential for lenders, purchasers, and insurers.

Instead of relying on developers who might be unavailable or unresponsive, this reform gives housing societies the power to apply for an OC on their own. Since an OC is often a crucial requirement, it facilitates redevelopment and assists societies in resolving long-standing compliance issues through collective decisions.

However, the reform does not imply legal amnesty or automatic approval. If there are significant unauthorized constructions, safety issues, or major non-compliances, authorities may still reject applications. Particularly in cases where only a partial or conditional OC is granted, societies may have to pay for expenses like fines and professional fees, which could limit some of the anticipated benefits.

The Maharashtra government’s action could significantly boost Mumbai’s real estate market. Since many buyers avoid properties without the necessary approvals, buyer confidence is likely to rise as more housing societies acquire OCs. Additionally, more investors and end users will be drawn in by a clearer legal status. Over time, this reform might also encourage developers to adhere to building and safety regulations more closely, raising the standard of housing in the city as a whole.

Some points are evident even though the comprehensive Government Resolution is still pending. Housing societies without commencement certificates or conveyance deeds may still apply for an OC. Societies may also apply if they have made structural changes or used additional FSI, as long as they pay a premium at discounted rates. The program will only be accessible for a brief time, with the objective of ensuring that all housing societies in Mumbai receive an OC by regularizing excess FSI or changes at discounted rates.

The real estate system in Maharashtra has undergone a significant change due to this reform. Allowing housing societies to apply for an OC helps address long-standing compliance issues, reduces total reliance on developers, and, when applied properly, promotes lawful regularization, improved safety, and more seamless urban redevelopment without undermining planning regulations.