When we purchase a property, a lot of transactions are involved in its process. A NO OBJECTION CERTIFICATE (NOC) is one such important document involved in property transactions. A NOC is a document that essentially proves the ownership of a person over the property. It specifically states that the property is free from all debts and encumbrances. This document is generally obtained when a person repays the loan amount or any other transaction in relation to the transfer of property.
A NOC is a mandatory document that needs to be obtained from banks or financial institutions by both, the builder and the home buyer. Most of the time, the builders obtain a home loan from banks or financial institutions to develop their projects. Once the project is completed and the whole amount (Principal amount + interest + other fees) is repaid, they have to necessarily obtain a NOC from the institution that lent the money, in order to remove the mortgage over the property, if any.
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What is the list of all possible NOCs?
A NOC is a document of great essence that is needed at the time of the possession of the property. Depending upon the type of property and the transactions involved, there exist different types of NOCs that have to be obtained by the builder or home buyer. The varied types of NCOs that are imperative while undertaking property transactions in India are
NOC from society/builder
NOCs from society/builders (where societies are not formed) should be obtained by the unit buyer to ensure that all the dues of the society by the seller are paid off and that there is no mortgage over the unit.
NOC from mortgagee
It is important to obtain a NOC from a bank/financial institution that has mortgage rights over the property. It ensures that the sale cannot be challenged by the bank/financial institution having a mortgage over the project.
NOC from collector
Under Maharashtra Land Revenue Code, 1966 prior permission of the Collector is necessary for the transfer of any property on collector lands.
NOC from Charity Commissioner
Depending upon the various state laws, permission may be required from the appropriate authorities prior to the transfer of any property belonging to a charitable trust. For instance, in Maharashtra, under Section 36 of the Maharashtra Public Trusts Act, 1950 prior permission of the Charity Commissioner is required for transfer or long-term lease of immovable property belonging to a charitable trust.
NOC under RERA
Under Section 15 of the RERA, the promoter requires the prior written consent of 2/3rd allottees for transfer/assignment of the rights and liabilities in the project to a third party. Further, consent of the Real Estate Regulatory Authority is also required to be obtained.
What is the purpose of a NOC certificate?
Being a crucial document that is needed during the sale and purchase of a property, the NOC acts as a legal authority that categorically states and certifies that a building does not violate the terms and conditions of an organization or institution. It is a statement of permission that is given to a person or a company to proceed with the purchase or construction of a property. Without a NOC the property may be bound by legal hardships. It is issued by the government in the best interests of society. It is proof that the property is safe from natural or expectable dangers.
In the real estate sector, a NOC is usually obtained for the purpose of a bank loan/mortgage of a property. A NOC has to be procured from the bank or any other financial institution, especially in the following cases –
- Transfer or sale of the mortgaged property
- Closure of a loan
- Loan transfer from one bank to another
Is No Objection Certificate required from the builder?
When a person purchases a property from a builder, he must procure a NOC. However, in most cases, it has been observed that the presence of a cooperative society in an apartment/building ensures the presence of easy and conflict-free living.
Acquiring a No Objection Certificate from the society, including the apartment or the builder from who the buyer has purchased the apartment, is essential. Obtaining a No Objection Certificate ensures that there are no dues on the property by the seller at the time of the sale of the property. It is also proof that the respective society association will not refuse the induction of the buyer as a member. A No Objection Certificate is also required when a property transaction is carried out in order to avail a loan from a bank or any other financial institution. Society will not transfer the apartment without No Objection Certificate from the bank.
However, one must be cautious of fraudulent activities and thus one must while procuring a NOC from the builder verify the following details
- Authentication of the No Objection Certificate
- Name and address of the buyer
- Payment details must be mentioned expressly
What is the importance of No Objection Certificate?
No Objection Certificate is a document that acts as a legal authority that specifically states and certifies that a building does not violate the terms and conditions of an agency, organization or institute. When one constructs a house, an apartment complex or any other such structures, it is the duty of the applicant to procure a NOC from various departments and government authorities.
For example, it is the responsibility of the builder in the case of commercial structures to obtain a fire-safety clearance according to the fire safety rules and regulations as stipulated in the Development Control Rule 1991 and the National Building Code. No such structure can be built within 100 ft or 30 m outside a railway boundary without obtaining a NOC from the Indian railway. In addition to this, certain state governments may not issue a No Objection Certificate to construct new apartments in and around Bangalore where drinking water is not available.
Therefore, if a building violates any of the building/ construction bylaws, it will not receive a No Objection Certificate from the urban development authorities or other authorities concerned. Further, government authorities are expected to issue No Objection Certificate only after stringent, transparent, and fair inspections.
How much should a builder charge for a No Objection Certificate?
One of the major hurdles faced by property owners in the sale of a flat owned by them. Before any such sale of a flat is made, it is necessary to obtain a NOC from the builder. Builder NOC is an important document because it allows for the direct transfer of under-construction property. Normally, Builder NOC is a standard format by a builder.
A builder NOC is issued when the initial buyer wants to sell the flat to a third party. The builder charges a transfer fee to the buyer for the issuance of the NOC. The normal charges for a builder NOC are between Rs. 200 to Rs 1000 per square feet area of the property.
However, it is important to note that the transfer charge demanded by the builder for the issuance of a NOC to the initial buyer has no legal basis. This happens because the builder has an undue influence on the owner to issue a NOC. Such an act of the builder is considered as an abuse of his dominant position over the initial buyer.
A No Objection Certificate is one of the vital documents which are necessary in the process carried out during a real estate transaction. There are various types of NOCs depending upon the property and the involved processes. Such NOCs are required to be procured from the real estate developer, state real estate authorities, collector, banks or financial institutions, etc. Further, a NOC also has to be obtained if there is a transfer of property made by an NRI. These NOCs have to be obtained in accordance with the RBI norms and the Foreign Exchange Management Act (FEMA).
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