Imagine moving into a new flat your recently purchased, and being asked to clear previous owner’s dues? A similar situation happened with a man in Kochi, who narrated his ordeal on Reddit. The person shared that he purchased a flat through a bank loan in 2022 without a NOC. Most of the deal was handled by a broker and he met the owner only near the final stage.
Situations like these not only ruin the joy of finally owning and moving into your own home, but also lead to a strain on your pockets, especially after you have already spent lakhs or even crores to buy a house.
In his Reddit post, the buyer shared that the previous owner had around Rs 80,000 in pending maintenance dues, which he assured will be settled. But around 4-5 after the new owner moved in, the housing association asked him to pay the dues. The members also told him that he should have obtained NOC first.
What should you do if you ever find yourself in such a situation after shifting into a new home? What are some key checks you must conduct even before buying the flat?
Homebuyer asked to clear previous owner’s maintenance dues: Is he legally liable to pay?
Experts suggest that in cases like this, the buyer should immediately seek legal help and take appropriate action.
Tushar Kumar, Advocate, Supreme Court of India, told ET Wealth Online that the legal position in such cases is seldom as straightforward as either the apartment association or the purchaser may assume.
“A purchaser confronted with a demand for arrears pertaining to the previous owner should immediately seek the legal foundation of the claim, including the applicable statute, registered bylaws, and complete statement of outstanding dues.” He added the purchaser must also examine the sale deed and contractual documents.
Manmeet Kaur, Partner at Karanjawala & Co, also said that homebuyer agreements generally include an indemnity clause, on the basis of which, the homebuyer can initiate appropriate legal action against the seller for non-payment of maintenance dues.
Does liability for such unpaid dues automatically transfer to the new buyer?
Although the law is not settled on the imposition of liability in case of unpaid dues, it is heavily dependent on the governing bylaws of the concerned society/association, which would determine as to whether the buyer would be liable to clear the dues of the previous owner, explained Kaur.
For example, as per the Uttar Pradesh Apartment (Promotion of Construction, Ownership and Maintenance) Act, 2010, the homebuyer is jointly liable along with the previous owner towards the common expenses up to the date of sale.
Kumar, meanwhile, pointed out that as a matter of settled legal principle, personal contractual liabilities ordinarily remain with the person who incurred them and do not automatically devolve upon a subsequent purchaser merely by virtue of transfer of ownership.
However, the position is nuanced in the context of apartment ownership.
“Certain State enactments, registered declarations and association bylaws may recognise unpaid maintenance charges as recoverable against the apartment itself or may make transfer subject to prior clearance of society dues,” he shared. Whether the purchaser can be compelled to discharge such arrears is ultimately a question governed by the association’s governing documents, and contractual terms of the deal.
Can the apartment be cleared for sale despite unpaid dues?
The mere fact that the previous owner succeeded in executing and registering the sale deed despite outstanding maintenance dues does not, by itself, render the transfer legally infirm.
Advocate Kumar highlighted that registration authorities generally do not adjudicate private maintenance liabilities. “Unless a maintenance clearance certificate forms part of the lender’s due diligence requirements or is mandated under the governing statutory regime, the transaction may lawfully proceed notwithstanding subsisting dues.”
Moreover, there exists no embargo upon the seller to clear all maintenance dues before selling a flat in law, according to Kaur.
Is association NOC necessary before buying an apartment?
Although there is no mandate in law for obtaining a No Objection Certificate (NOC) before buying an apartment, it is strongly advised that an NOC is procured to avoid any future disputes.
The necessity of such an NOC depends upon the governing State legislation, the registered bylaws of the association and, in certain instances, the contractual framework of the development itself.
“Nevertheless, as a matter of prudent conveyancing practice, obtaining a written maintenance clearance or no-dues certificate before completion of the transaction is highly advisable, as it substantially mitigates the risk of post-transfer disputes,” added Kumar.
Planning to buy a house/flat/apartment? Do these key checks first
Kaur underlined that every buyer must be guided by the principle, Caveat Emptor (Latin for ‘let the buyer beware’). This casts a burden on the buyer to perform their due diligence and closely scrutinise the property for any such deficiencies before making the purchase.
- Obtain no dues certificates from the buyer and other concerned authorities
- Include indemnity clause in the sale agreement
- Verify payment of maintenance, property tax and utility charges
- Scrutinise the association’s registered bylaws
Mere reliance upon oral assurances or broker-facilitated representations, without independent legal verification, frequently proves to be the genesis of avoidable and protracted disputes.
