Understanding Basics of A-Khatha, B-Khatha and Occupancy certificate

This page records my learning on the property legal issues that I gathered from my  experience of searching an apartment in Bangalore for 1 year.

Before you make any decision on your investment toward's the property in Bangalore..I believe these are the basic things that one should know.

As we all aware, Property tax has to be paid from every individual who owns a property, Government Authorities like BBMP maintains an Account for every property to collect the property tax from the property owners and that account is called A - Khatha.

A - Khatha will be issued to a property only if the property which is not having any legal issues 

(Only for legally constructed properties, Not for ill-legal properties).

Apartment searchers Note:

What is defined as ill-legal properties?

In simple terms, this illegal property has a chance to be get demolished by BBMP, but it depends on what type of illegal the property is.

In this way, Government was able to collect taxes from A-Khatha properties but was unable to collect the taxes from ill-legal properties, So Government Authorities introduced B- Khatha and started collecting the taxes and maintaining a separate account called B-Khata.

It is very clear now, the Parents for B-Khatha are illegal properties.

Apartment searchers Note:

Most of the apartment builders in bangalore are B-Khatha properties, so if you enquire a builder about a difference between A-Khatha and B-Khatha.. The builder may have created stories for you which is supporting B-Khatha.

Property consists of two items, 

Land                +    Building belongs to the Land

Why a B-Khatha is issued to a LAND?

Let's say you own a piece of land or a plot, your tax will be accounted in B Khatha, if you dont have one of the below (But definitely not limited to) 

a)  NOT DC converted.

b) Pending Tax.

c) No Betterment chargers paid.

Among these three, DC conversion is critical, If you had registered a land for residence purpose, the land should have been DC converted.

DC conversion ensures that the agriculture land is converted to non-agriculture lands, basically to residential plots, It is illegal to construct a building on the agriculture land or in the Lake area, It is the high risk, if you construct a building on a land which is not DC converted.

Why a B-Khatha is issued to a Apartments/Building?

See the possible reasons below

a)If you construct a building on a B- Khatha land

b) If you dont have an CC or OC for your property

    CC  - Completion certificate.

    OC  - Occupancy certificate.

    OC and CC are mandatory for the building which has more than 5 units.

 How important is that OC and CC?

Before the builder initiates the construction of a building, the engineer will prepare the plan for the     building and submit for approval to the government authorities. the plan should get approved.

Once after the building is constructed, builder will inform the government authorities that the construction of the building is complete.Government will issue an CC for your building.and also   they will arrange a visit to the site to verify if the building has been constructed as per the sanctioned plan. the building can have a maximum of 5% deviation from the approved plan, 

But in case if the  deviation is more than 5%,the Govt authorities has the rights not to issue the OC for this property. when OC is not received,    you will get only a B- Khatha for your property.

Apartment searchers Note:

Many apartment builders in bangalore does not have the OC and CC for their building, which means they have the building deviation more than the allowed 5%.

OC and CC are issued to the entire building, not for individual flats or not for individual floors.

Land should have A- Khatha and the building belongs to that land should also have A-Khatha, then your property will receive A-Khatha.

It works like in the following table'

LAND	BUILDING belongs to that LAND	Property Khatha
A-Khatha	B-Khatha	B-Khatha
B-Khatha	A-Khatha	B-Khatha
A-Khatha	A-Khatha	A-Khatha

Apartment searchers Note:

Majority of the apartment buyers buy apartments which are being constructed, these are called Under construction properties

When you book an apartment which is being constructed, you will never know whether you will receive OC or not. because it purely depend's on your builder and how he completes the construction .In this case, Before booking, you have to inquire the builder very clearly about OC. and it is better to get a word from the builder in the SALE agreement, that the builder will get the OC from government.

It is the builder responsibility to get you the OC.  it's more important to get a legal advise from the lawyer before you book.

Without receiving Occupancy certificate,it is illegal to occupy the building.that is possession for your flat is not legally allowed when you dont have this critical document with you.

   How bank loans are getting approved for apartments which is not having OC?

   Bank will approve loans to a flat without OC only if the build-up land is A-Khatha and if the building is a under construction property. the property would be still considered as A-Khatha until the construction is completed.

 When the property is being constructed, Bank cannot expect the builder to produce the OC, and bank will never know if the building is going to receive OC or not.

Lets say, you approach a reputed bank for a loan for a apartment, which is under construction the bank may approve a loan for you request.

Same bank for the same property may not approve the loan after construction unless there is a OC.

Ok All right!!! what happens when I end-up buying an B-Khatha property?

a)  If you buy an apartment without OC, your apartment is at risk and you  may have to face the legal issues, At worst case, it may even lead to the demolish of building.

b) It is not easy to sell your property,when need arise.

 Because bank will not issue loan for your buyer if you dont provide the OC for the bank..

But at the same time, if your buyer is wealthy enough to buy the apartment from you at one check(without any loan) then you are absolutely fine.

I think I demonstrate the basics of  Khatha, But it is always better to get a legal advise from the lawyer before you book a property

Thanks for reading this!!!.

Please leave your comments for any feedback and suggestions.