No objection certificate is an important document that is required in the sale and purchase of a property. The No objection certificate is issued to convey that the person of the property has not violated any term and conditions that have already been agreed upon previously to an organization, agency, or institution.

No Objection Certificate or NOC is one of the most common documents that is required by the buyer while exercising due diligence. No objection certificate needs to be issued by various entities such as the builder, banker, mortgagor, and other statutory bodies such as RERA authorities, etc. The certificate is a must check and must have a document, without which the buyer of the property may face legal hardships shortly.

[lwptoc numerationSuffix=”dot” title=”Table of Contents” width=”full” titleFontSize=”16px” itemsFontSize=”16px” colorScheme=”light”]

No Objection Certificates Issuing Authorities

Listed below are few common entities from whom the buyers have to mandatorily obtain the no-objection certificate.

  • No Objection Certificate from Society or Builder

It is integral that the person acquires the NOC from the society in which the property is situated. It is also important to get the NOC from the builder. The procurement of a NOC is a clear indication that the seller does not have any liabilities pending on the property and that the property is free from encumbrances or any form of debt. This is also a legally valid document that can be used to prove the non-liability of the buyer if any dispute arises regarding the liabilities on the property. Acquiring the NOC from society is also proof that the buyer’s induction as a new member of the society has not been rejected or refused.

It is important to obtain a NOC from the builder or the developer of the house as it gives the buyer the complete right of possession, enjoyment, and disposal of the property. When the NOC is granted by the builder he declares the buyer as the sole owner and the person in possession of the property and also relinquishes any rights vested in him till that date. However, the builder or developer may deny issuing a NOC until the loan is taken to finance the project is completely paid off. Thus obtaining a NOC from the builder and the society can help the sales transaction successful without any legal hurdles.

  • No objection certificate from the bank:

The NOC also needs to be acquired in cases wherein the property has been transacted by availing bank loans or loans from any financing institutions. The Societies generally refuse the induction of a new member or the transfer of the property in case the no-objection certificate has not been obtained from these financial institutions.  The NOC from the bank is mandatory not only for the buyer but also for the builder.

It is an important factor to note that many of the builders take loans or mortgages to finance their projects by keeping the property as a guarantee and on the completion of the project, the builder becomes liable to settle the amount so availed. The amount needs to be paid off in full to remove the mortgage tag from the property as well as make the property encumbrance free. On issuance of the no objection letter, the bank also relinquishes its claim on the property.

  • No Objection Certificate as per RERA

Section 15 under the Real Estate (Regulation and Development) Act states that when a developer of a project hands over their right in the property to a buyer, they are required to obtain a no-objection certificate from at least 2/3rd allottees involved in the project. On obtaining the same, the RERA authority issues a similar certificate.

If the construction project of the house has been distributed amongst other developers, then it is required by section 15 on the part of the builder to obtain NOC from the 2/3rd of the allottees of the project.  The Real Estate Authority or RERA was established by the Central Government to ensure and reduce the exploitation of new investors and home buyers.

  • No Objection Certificate of Court by Administrator

Section 307 of the Indian Succession Act of 1925 states that the administrator is not in a position to sell, mortgage, or exchange the property entrusted to him without the no objection letter from the court. The section also provides that the administrator is not permitted to lease out the property for more than five years. In case the property is let out to the builders, the no-objection certificate is issued by the authorities only after conducting a strict inspection of the property. During the inspection factors such as compliance with the various construction laws and bylaws are also considered.

  • NOC in case NRI Property Transaction

In case an NRI wishes to transfer his property in India to a resident of India or the NRI wants to buy a property in India from a resident of India, then he is required to obtain a no-objection certificate according to the RBI norms and Foreign Exchange Management Act (FEMA). All these transfers or acquisitions of property can be made only after obtaining permission according to the Foreign Exchange Management Act and RBI rules and norms. A no objection letter is also required in cases wherein the property has been inherited by an NRI.

Conclusion

No objection certificate is an important document that declares that the immovable property so engaged in a transaction is free from any form of debt, obligation, or legal complications. The no-objection certificate is issued by various bodies such as the society, builder, banks, and other financial institutions, courts in case the transfer is made by the administrator, the RERA authority, etc.

The certificate is issued by the society showing that there is no refusal to accept the new member’s induction into their society. The society also issues NOC to certify that the property for sale within the society is free from any legal or financial liabilities. The builders are also required to submit a NOC by showing that all the debts incurred on the property have been settled and that the property is completely transferred. The buyers should ensure that all the no-objection certificate needs to be obtained to avoid any legal conflict in the future.