How do I check for outstanding property tax or other dues before buying a property?

Question

I want to make sure the flat I am buying has no pending property tax, water or electricity dues before I complete the purchase. How do I verify this? I would like to understand which provision governs this, what it entitles me to, and how long I have before the remedy lapses. I also want to know whether I need a lawyer for this or can do it myself.

MyVakeel Legal Desk · Accepted Answer

In India, the answer to "How do I check for outstanding property tax or other dues before buying a property?" turns on Municipal Corporation laws (state), respective property tax provisions, Transfer of Property Act 1882, Section 55 and Registration Act 1908, Section 17. The points below set out the position and then what to do about it, in the order it should be done.

Property tax is a charge on the property itself under most municipal laws, so unpaid dues can follow the property and be demanded from a new owner even though the liability arose during the previous owner's tenure.

Section 55 of the Transfer of Property Act requires the seller to disclose any charge or outstanding liability affecting the property that is within the seller's knowledge and not apparent to the buyer.

Buyers should obtain a latest property tax receipt and a 'no dues certificate' from the municipal corporation, along with clearance certificates for water, electricity and maintenance charges from the relevant utility or housing society.

Any statutory charge or attachment for unpaid dues recorded against the property should also appear in the encumbrance certificate obtained from the sub-registrar's office.

It is prudent to insert a specific indemnity clause in the sale deed making the seller liable for any dues relating to the period before registration, so the buyer has a contractual remedy if a demand later surfaces.

What to do next: 1) Obtain the latest property tax receipt and a no-dues certificate from the municipal authority; 2) Collect clearance certificates for water, electricity and society maintenance charges; 3) Cross-check for any charge entries in the encumbrance certificate; 4) Include an indemnity clause in the sale deed covering pre-registration dues.

If you are unsure whether your facts fall inside Municipal Corporation laws (state), respective property tax provisions, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in property law.