Everything you want to know about the possession certificate

However, the journey of acquiring a home loan necessitates numerous documents. The possession certificate is at the top of this list. But there's a twist – often, people confuse it with the possession letter. The latter is a declaration from the builder or developer signifying the handover of the property. Yet, it's the possession certificate that carries more weight since it is a government-recognised document.

It’s important to understand what a possession certificate is along with the nuances of property documentation like how it is different from an occupancy certificate. Read on to learn more.

What is a possession certificate?
 

A possession certificate serves as proof, given by the property's seller to the buyer, signifying the transfer of possession. This certificate isn't just a mere document; it holds significant weight, especially when you are considering financing options. Planning to get a home loan from a bank? The possession certificate plays a pivotal role in that process.

Now, where you obtain this certificate depends on where you reside. If your home is in a rural expanse, expect the Tehsildar to provide you with the possession certificate. However, for those living in the urban regions, your go-to authority for this document will be the Revenue Divisional Officer (RDO). 

Conditional possession certificate
 

When a home buyer receives the possession certificate but finds discrepancies in the property's condition or maintenance, they can issue what is known as a conditional possession certificate. This certificate is often used when the property has issues like incomplete construction or damages, or when certain changes agreed upon initially are not incorporated.

A conditional possession certificate lets the buyer set specific conditions for taking possession of the property. However, if the builder or property owner does not adhere to the terms outlined in this certificate, there can be complications. It is crucial to ensure all terms are met to maintain a smooth transaction.

What is an occupancy certificate?
 

An occupancy certificate, often abbreviated as OC, is a critical document issued by local municipal authorities. This certificate signifies that a newly constructed building adheres to the set building codes, and standards, and is fit for habitation. Essentially, it confirms that the building is constructed as per the approved plans and meets all the necessary infrastructural and safety norms.

For a property buyer, securing an occupancy certificate is of paramount importance. It not only validates the legal status of your property but also ensures that utilities like water, electricity, and sewage systems are in place and functional. Without an OC, living on the property can be deemed illegal, and utilities might be disconnected. So, from a financial and legal standpoint, before making that final property transaction, always ensure the availability of a genuine occupancy certificate.

Possession certificate vs occupancy certificate
 

When dealing with real estate, it is essential to understand the difference between a possession certificate and an occupancy certificate. While a possession certificate denotes the property's completion date, an occupancy certificate is a green signal from local authorities that the property is fit for residence. The latter provides you with the official right to occupy the property, a guarantee not offered by the possession certificate.

To answer the question, “What is the difference between a possession certificate and an occupancy certificate?” in a simple manner:

Possession certificate: "The house is now yours."

Occupancy certificate: "This house is safe and built as per regulations; you can now live in it."

Without the latter, living in the house might be considered illegal, even if you own it.

Steps to obtain a land possession certificate

Step 1: Visit your nearest Anchaladhikari office or Right to Public Service (RTPS) office and get your application form.

Step 2: Fill in the application form with the required details.

Step 3: Submit the filled-in form to the concerned office.

Step 4: Collect the acknowledgement receipt along with the application number.

Step 5: Await the verification process where the details you have provided in the application will be cross-checked with land records and on-ground facts.

Step 6: During this period, the concerned officer might visit the property for an on-site assessment to ensure that the details match.

Step 7: Post verification, if everything is in order, the office will prepare your land possession certificate.

Step 8: Once ready, you will receive a notification, either through SMS or a call, to collect your certificate.

It is crucial to ensure all the details mentioned in the application are accurate to avoid delays or rejections. Any discrepancies found during the verification might require you to reapply or provide additional supporting documents. Also, note that when placing an application for a possession certificate, you may incur a fee, which may differ from one state to another state. This fee depends on the income group you fall in. Once the application procedure is initiated, it usually takes close to a week for your possession certificate to be issued post-verification.

Documents needed to obtain a possession certificate
 

The documents listed below must be provided by you to obtain the possession certificate.

• Ration card
• Aadhaar card
• Income certificate
• Proof of property or land tax paid to date
• Proof of ownership of property
• Encumbrance certificate (Form 15)
• Two passport-size photographs
• Photographs of the property or building

In addition to these, you may need to submit some state-specific documents that differ from one state to another. Once you gather all the listed documents, ensure they are up-to-date and authentic to avoid any hindrances during the application process. In the case of any confusion or clarity, it might be beneficial to consult with local property experts or legal advisors to be well-prepared.

Importance of possession certificate concerning home loans
 

A possession certificate needs to be furnished when applying for a home loan. Hence, if you intend to avail one, you might want to keep the required documents ready and obtain a possession certificate at the earliest. 

Moreover, when applying for a home loan, it is a must to consider not only the principal constituent but even the rate of interest, repayment tenure, and other associated fees and charges. Understanding these aspects can help you manage your finances efficiently. With financial institutions like IDFC FIRST Bank offering tailored home loan solutions, it has become easier to strike a balance between fulfilling your dream of homeownership and maintaining financial stability.

FAQs
 

What is illegal possession of property?
 

Illegal possession of property refers to the unauthorised occupation or control over someone else's property without legal entitlement or permission. It can arise from situations where a person might forcefully occupy land or a house without any legal right, or even when tenants overstay beyond the agreed lease period without the consent of the property owner.

Such acts are considered unlawful and can lead to legal consequences. Owners have the right to seek legal remedies, like filing a suit for eviction or seeking damages, against those in illegal possession. Financially, it is crucial to have clear property rights and documentation to avoid disputes and potential losses. Engaging in property matters without proper legal grounds may not only lead to financial burdens due to litigation but can also harm one's credibility and reputation in the market.

Is possession letter proof of ownership?
 

A possession letter is offered by the developer or builder indicating the property’s handover to the buyer. However, it is essential to understand that while this letter shows physical handover or possession, it does not establish legal ownership of the buyer. To establish legal ownership, one needs a possession certificate.

This certificate is generally issued by local governmental authorities, confirming the transfer of possession from the seller to the buyer. In straightforward terms, the possession letter shows you have received the property, but the possession certificate is a stronger document that indicates your legal claim over it. When dealing with property-related financial or legal matters, having a possession certificate is crucial.

What is the importance of possession of property?
 

Having rightful possession of property is not just about having a physical space; it carries significant financial, legal, and emotional value. Legally, possession signifies one's control and claim over the property, which allows one to make future transactions like selling, leasing, or mortgaging. Financially, a property under one's possession can be a substantial asset, often appreciating over time, and can be leveraged to secure loans or generate rental income.

Moreover, in our country where property is often seen as a symbol of stability and prosperity, possessing one boosts social stature. For many, owning and possessing a property is a life goal, representing security for their family and a legacy for future generations.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.