Unnecessarily, don't take on the burden of paying the money. Be aware of your rights
Property tax is levied by the municipal authority of a state on immovable properties within its territory. It forms a principal source of revenue for the municipal body. In Delhi, property tax is collected by the Municipal Corporation of Delhi (MCD) or the New Delhi Municipal Corporation (NDMC) -if the property is under their jurisidiction.
Now the question is, whose liability is it to bear the property tax? The answer to this question depends on the kind of relationship the parties involved in a property transaction share: Is it a buyer and seller? A landlord and his tenant or are they joint owners?
Let's look at each of these: Buyer-seller relationship Before purchasing a property in secondary sale, it is important to conduct a thorough due diligence. The buyer must visit the office of the local municipal authority to check whether the seller has paid all property tax dues to date and ensure everything is paid up.
Sometimes, parties mutually decide that the buyer will pay the property tax dues of the seller, and that such payment will be adjusted in the amount of sale consideration. From the date that the seller transfers ownership of the property in favour of the buyer, it is the buyer's liability to pay property tax.
Landlord and tenant: As property tax is levied on the title of ownership of an immovable property, it is the landlord's liability to pay property tax and he cannot force the tenant to pay it. If the landlord refuses to do so, or is unable to pay this tax, the tenant may make the payment and subsequently recover the amount from the owner, such as by apportioning it from the monthly rent.
However, sometimes parties may mutually decide that the tenant will pay property tax and that such payment will be adjusted in the rental amount for the property. To enforce such an arrangement, a clause to this effect should be present in the lease deed between them.
Joint owners: In the case of joint owners of a property, payment of property tax is a shared responsibility. The onus of how much property tax each owner has to pay will depend on the proportion of ownership held by the individual in the jointly-owned property. For instance, if X, Y and Z own 50%, 30% and 20%, respectively in a property, X will be liable to contribute 50% amount of the tax, Y, 30% and Z, 20%. Of course, the joint owners can mutually agree on a different arrangement under a contract between them.
As property tax is often a hefty financial liability, you must decide who should pay it at the very outset. Be aware of your rights and liabilities in advance and minimise chances of litigation.
Courtesy – HT Estate (Hindustan Times) - Dt – 26/11/2011