The Builder Must Pay Taxes and Outgoings Until the Property Is Conveyed to the Society

In Maharashtra, the developer — whom the law calls the "promoter" — must keep paying the property tax, ground rent, water charges and every other outgoing on a redevelopment building until legal ownership of the land and building is conveyed to the housing society. This duty flows from Section 11 of the Maharashtra Ownership Flats Act, 1963 (MOFA), which makes the promoter responsible both for conveying title to the society and, until that conveyance happens, for bearing the outgoings and taxes on the property. Taking possession of a flat does not shift this burden onto members. Courts in Mumbai, MahaRERA and the consumer forums have consistently refused to let developers push these statutory costs onto members before the transfer of title is complete.

What the law actually says

MOFA is the older Maharashtra law that governs the sale of flats and the duties of a builder toward flat purchasers. Section 11 of MOFA places two linked obligations on the promoter. First, the promoter must take all steps to convey the land and the building to the organisation of flat purchasers — that is, to register a conveyance deed in the society's name. Second, until that conveyance is executed, the promoter continues to hold the property and therefore continues to carry the outgoings on it. The two duties go together: the promoter cannot enjoy the status of owner while refusing the costs that come with ownership.

"Outgoings" is read broadly. It includes ground rent payable on the land, municipal or local taxes (property tax), water charges, common-area electricity, revenue or non-agricultural (NA) assessment, and interest on any mortgage or charge on the land. In short, it covers the recurring, property-level charges that keep the land and building in good legal standing — the charges the Municipal Corporation and the collector look to the owner to pay. It is different from a member's own electricity bill or their share of day-to-day housekeeping, which members naturally pay once they move in.

MOFA also builds in a safeguard against a common abuse. If a promoter collects money from members towards these outgoings but does not actually pay the concerned authority, the promoter stays personally liable for those unpaid dues and any penalties, even after the property is finally transferred. A builder cannot quietly collect maintenance, leave the property tax unpaid, and then hand the society a pile of arrears on the way out.

Why conveyance is the dividing line

Conveyance is the legal step by which ownership of the land and the building passes from the developer or the original landowner to the society. Possession of a flat is not the same as ownership of the property. A member can live in a flat for years while the builder remains the owner on record in the municipal and land registers. As long as the builder is the owner on paper, the builder — not the members — is the person the Municipal Corporation and the collector pursue for property tax, assessment and ground rent.

A conveyance is also not complete just because the parties signed a document. Under Section 17 of the Registration Act, 1908, a conveyance of immovable property must be compulsorily registered before the Sub-Registrar; an unregistered transfer does not pass clear title. So a "society formed" or "possession given" milestone is not the finish line. Until the registered conveyance is in place, the society has no clean title, cannot mortgage or freely repair the building, and stays exposed to the builder's unpaid liabilities. Our detailed conveyance guide walks through the full process, and the possession and corpus guide shows where conveyance fits alongside possession and the corpus fund.

Who bears what, before and after conveyance

Members do, of course, pay for their own flat's electricity and their share of everyday maintenance once they occupy. The point of the law is narrower: the statutory outgoings on the property as a whole stay the builder's responsibility until the title is transferred.

How the courts and MahaRERA have reasoned

The reasoning of the Bombay High Court, MahaRERA and the State and National Consumer Disputes Redressal Commissions runs along a consistent line, even though the facts differ from case to case. Liability for the property's statutory dues follows ownership: the person who is the owner of record is the person the law holds responsible. Because the promoter remains the owner until conveyance, the promoter carries the outgoings until then, no matter how long possession has been with members. Where a builder had collected outgoings from members but not paid the authority, forums have treated that as a liability that survives the transfer and can be recovered from the builder rather than left with the society.

The RERA framework reinforces the same principle from a different direction. A promoter remains responsible for the project until the association of allottees is formed and the common areas and title are handed over, and members can carry a grievance to MahaRERA under Section 31 of the Real Estate (Regulation and Development) Act, 2016. A failure to pay outgoings or to execute conveyance can also be raised as a deficiency of service under the Consumer Protection Act, 2019. Importantly, none of these routes asks the society to first absorb the cost itself and then chase the builder — the duty sits with the promoter from the start. You can read more about the promoter's ongoing duties in our note on MahaRERA promoter obligations.

Deemed conveyance: the remedy when a builder stalls

The most common problem in Mumbai is not a builder who refuses conveyance on paper, but one who simply never gets around to it — often precisely so it can keep control of unsold flats and avoid clearing dues. MOFA answers this with Section 11(3), which lets the society obtain a "deemed conveyance." In plain terms, the society applies to the Competent Authority (the District Deputy Registrar of Co-operative Societies notified for this purpose), which hears the application, examines the records, and — if satisfied that conveyance is due — issues a certificate and an order that has the effect of a conveyance even without the builder's signature. The society then registers that order to complete its title.

Deemed conveyance still attracts stamp duty and registration charges, and stamp duty on a conveyance is generally worked out on the ready reckoner (annual statement of rates) value of the property. Our explainer on ready reckoner rates in redevelopment covers how those figures are set, so your committee can budget for the transfer rather than be surprised by it.

What this means for your society

For a Mumbai housing society, the practical takeaways are straightforward. The law is on the members' side; the challenge is usually enforcement and record-keeping.

• Do not silently absorb the builder's dues. If the builder still holds title and is asking members to pay property tax or ground rent, question it and object in writing rather than paying quietly.
• Treat conveyance as a priority, not an afterthought. Until the deed is registered, the society's title and finances stay exposed. Chase conveyance from the day possession is offered, and read what to do when a builder delays if it stalls.
• Verify arrears before you accept transfer. Before conveyance is executed, confirm with the Municipal Corporation and the collector that property tax and other dues are clear, so old liabilities do not travel to the society.
• Watch the agreement wording. Some development agreements try to shift outgoings to members before conveyance. Our guide on red flags in a development agreement covers this, and our tender and agreement review service can flag such clauses before you sign.
• Register and organise early. A properly formed, active society is in a far stronger position to enforce these rights and to apply for deemed conveyance. If your society is not yet formally set up, start with register your society.

Where you can raise the issue

Choosing the right forum matters, because a wrong filing wastes time. If you are unsure whether your dispute belongs before MahaRERA, a consumer commission or elsewhere, our sibling explainer on which forum hears a redevelopment dispute lays out the options, and comparing developers up front on the offer comparison tool helps you avoid builders who leave these obligations deliberately vague.