You have waited enough and you are in a hurry to move in to your apartment. To save some extra bucks you sideline the basics and sign bunch of documents that were presented to you by builder. Did you read those documents?
Update[20/10]: Now that NGT issues is over, Letter of Fitout is completely illegal.
Because of NGT stay on occupancy certificates in Noida, builders can not offer legal possession to home buyers. This is applicable to all the projects that are in the range of 10 kms from “Okhla Bird Sanctuary”. In a workaround, builder came up with a new terminology usually referred as Offer of fit-out or Letter of Fitout.
Offer of fit-out / Letter of Fitout: Basically letter of fit-out is an offer from developer to carry out fitouts/furnishing but you are not allowed to move in to your apartment. You end up paying the full amount to the builder but you are not the lawful owner of the property. This is what letter of fitout offer asks you to submit application with wordings like this:
To save our precious time, I/we hereby request the Company to permit me/us to carry out fit-out/furnishing in the Unit and for that purposes offer temporary possession of the above said unit.I/We hereby agree / undertake to adhere to the terms of the said Allotment Letter/ Agreement in execution of the requisite work.
That I/we hereby agree to use the permission granted herein by the company specifically for the limited purpose of carrying Fit-outs/ interior designing in the said unit and I/we further agree and undertakes to comply with the terms of allotment/ Agreement and not to use the said unit for any other purpose before getting the Sub-Lease Deed for said unit registered in its favour, failing which I/we hereby undertake to bear and pay any penalty, cost, fine etc., as imposed by concerned competent Authority/Company in this regard.
Why should you be worried?
By offering possession of not fully ready apartments, builder is washing his hands off. If you read above mentioned clauses carefully, you would notice that he is putting the onus on you. Builders are offering letter of fitout without obtaining necessary approvals such a fire safety certificate, electricity connect, water connection, land payments dues eyc. So what is the risk if you accept offer of fitouts:
In case of any eventuality/disaster, the onus would come on the residents. An incident like Fire etc and authorities would be swift in throwing the residents out and may seal the complex itself. Why? because you have been residing in a building that does not have a Occupancy Certificate. In such scenarios you end up loosing insurance claim damages from unforeseen events and theft/burglary etc.
Most of these building where people have take offer of fitouts are reporting frequent lift breakdown. Inadequate security measures are more worrying.
So why did builder give such options at first place? Well, there are two reasons for that:
- Genuine Reasons: Due to the National Green Tribunal (NGT) order, the Noida Development Authority cannot issue completion certificates to any real estate project which falls in the 10 km radius of the Okhla Bird Sanctuary. In the absence of a completion certificate, no developer can legally give possession. This is a genuine problem with some developers who have completed their projects but are unable to offer possession.
- Illegal means: Builder is resorting to illegal means as he is unable to obtain occupancy certificate because he is unable to meet statutory requirements. For example, no fire clearance, electricity connection etc. Developers with delayed projects are offering this to wash their hands of their responsibilities. When pressurized by home buyers, developers offer possession just for fitouts in under-construction towers which could pose a serious risk to residents because of construction activity and lack of safety measures. Also, the moment builder offers these pre-mature letter of fitout , penalty meters stops and maintenance meter starts.
Is there any way out?: “The Logical Buyer” understands that we all have been under the burden of RENT + EMI and want to move in to our apartments at earliest. However, one should be careful and think about the safety of their families. While some of the genuine builders have offered such letters in good spirit, NCR is full of notorious and greedy builder who doesn’t think twice before putting your life at risk. We suggest that you double check following documents in case you have already decided to move in:
- Check Fire safety certificate.
- Ask for lift fitness certificate and maintenance agreement. To save money builder have not taken AMC yet.
- Cross check structural safety certificate.
- Ask for no dues certificate for land/plot. If builder defaults on the payments, you shall not be able to get sub-lease done.
- Ensure state electricity connection is in place. Builder have not paid one time charges to state electricity broad and societies are running on Diesel electricity generators 24 x 7.
- Ensure builder has applied for water connection etc.
One must know that offer/letter of fitout is optional and one can refuse to accept it.
Below is the objection letter of Noida Authority raised against a builder prematurely applying for OC and putting residents life at risk.
We have not been able to establish the fact if Noida Authority is allowing such fit out offers. If you have any document that proves that Noida is allowing this, please let us know.