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Buying a Home? Check If Previous Owner Has Cleared All Tax Arrears And BurdensBy yogisharma, Section Gurgaon Real Estate Property
You have bought your dream home with the sale deed clearly reading "the property is free from all kinds of encumbrances and burdens". But you need to hold back and ask your civic body first if all the property taxes till the date of the agreement have been paid by the previous owner. The burden to pay would pass on to you if he had shirked payment. Reason: the property tax on land or the building, and the liability to pay would travel with transfer.
As the civic body was not a party to the sale deed between the two sides, it cannot be made to suffer the financial loss owing to the transaction, according to legal logic. A city court has sounded a note of caution for all such prospective property buyers, who miss out on making necessary inquiries regarding the tax arrears while striking deals. Clearing the air on the contentious issue as to whether the new owner could be made accountable to pay taxes which had accrued to the previous title-holder, Additional District Judge (ADJ) Kamini Lau has said property taxes had to be recovered from the new owner as the his title with respect to the land or building would also transfer the burden upon him. "Since property tax constitutes the first charge upon the land or building and because property is fastened with this liability, the liability travels with it. The transferee is liable to pay property tax due not only for the period subsequent to transfer in his favour but even to the period anterior to the transfer," observed the court, reading from a Supreme Court judgement. click On "Full story" For More...
ADJ Lau said the primary liability to pay the taxes was upon the lessor, who has or is entitled to let off a building but if he had failed to do so, it can very well be recovered from the occupier. The occupier then would have to take legal recourse to get reimbursed the amount from the previous owner.
Way out? Ask the previous owner to send a notice to the civic body asking it to record your name as the new owner so that your liability starts from the date of the execution of the deed. Unless the authority is intimated about the transfer, all the notices served to the previous owner would be deemed to be served upon you and the accountability with respect of taxes would mount. The observations came as the court decided an appeal by the Municipal Corporation of Delhi (MCD) against a lower court's order. The lower court had directed the MCD to mutate a property bought by Sukhbir Singh Behl in Bulwara Road without asking him to pay the house tax ensuing before July 1990, when he had purchased the house. MCD claimed in the appeal that the law was clear in this regard that the tax was on the property and not on any individual and since Behl had the title, he had to clear the arrears before the property could be mutated in his name. The civic body further said it was never officially informed about the transaction so that it could change its records. ADJ Lau found substance in MCD's contentions and said Behl, a lawyer, would have to pay the arrears of Rs 20,473 in accordance with the provisions of Delhi Municipal Corporation Act for mutation of property in his name. source: Expres News Service 13/Sep/2008
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