Who Pays Pre-Possession Property Tax and Utility Bills? RERA Section 11(4)(g) for Mumbai Buyers

A few months after moving into a new Mumbai flat, some buyers open an envelope they did not expect: a demand for municipal tax or a utility charge covering a period before they had the keys. If they had already paid the builder for exactly these items, who owed the money, and who has to pay it now? The Real Estate (Regulation and Development) Act, 2016 answers that question in one clause that few buyers read: Section 11(4)(g).

This explainer sets out what the clause says, how it fits with the buyer's own duty to pay charges under Section 19, and the documents to collect so a pre-possession bill does not become your problem.

The short answer. Section 11(4)(g) requires the promoter to pay all outgoings it has collected from allottees, including land cost, ground rent, municipal or other local taxes, water or electricity charges, maintenance charges, and mortgage loan and interest related to the project, until it transfers physical possession to the allottees or their association. If the promoter fails to pay any of these before the transfer, it continues to be liable even after the transfer, along with penal charges and legal costs. The buyer's side is in Section 19(6) and (7): pay your share of these charges at the proper time, or pay interest for delay. The trade-off: the Act protects you on paper, but proving that you paid the promoter, and when, depends entirely on the receipts you keep.

What does Section 11(4)(g) say?

It makes the promoter pay what it collects. In the text of the Act published by the Telangana regulator, Section 11(4)(g) says the promoter shall pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the association of allottees, which he has collected from the allottees for the payment of outgoings.

The clause lists what counts as outgoings: land cost, ground rent, municipal or other local taxes, charges for water or electricity, maintenance charges, mortgage loan and interest on mortgages or other encumbrances, and other liabilities payable to competent authorities, banks and financial institutions related to the project.

The proviso is the part that protects buyers. Where any promoter fails to pay all or any of the outgoings collected from the allottees, or any liability, mortgage loan and interest, before transferring the project to the allottees or their association, the promoter shall continue to be liable, even after the transfer of the property, to pay those outgoings and any penal charges to the authority or person to whom they are payable, and be liable for the cost of any legal proceedings taken for them.

What does the buyer have to pay?

Your share, on time. Section 19(6) says every allottee who has entered into an agreement for sale under Section 13 is responsible for making payments in the manner and within the time specified in the agreement, and shall pay at the proper time and place the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent and other charges, if any.

Section 19(7) adds that the allottee is liable to pay interest, at the prescribed rate, for any delay in paying those amounts. Section 19(8) says these obligations and the interest liability may be reduced when mutually agreed between the promoter and the allottee.

Read together, the two sections create a simple chain. You pay your share to the promoter as the agreement requires. The promoter pays the outgoings it has collected to the authorities and lenders until it hands over physical possession. If the promoter keeps the money and does not pay, the liability stays with the promoter even after handover.

Why does the mortgage line matter to a flat buyer?

Because project loans can outlive the construction. The outgoings in Section 11(4)(g) expressly include mortgage loan and interest on mortgages or other encumbrances related to the project. The proviso keeps the promoter liable for any such loan and interest that it fails to clear before handing over the project.

The next clause, Section 11(4)(h), adds that after executing an agreement for sale for an apartment, the promoter shall not mortgage or create a charge on that apartment. Our explainer on Section 11(4)(h) and builder loans against your flat covers that protection in detail. For a buyer, the practical step is the same in both cases: before final payment, ask for written confirmation of the status of any project loan that covers your building.

When does the promoter's duty end?

At the transfer of physical possession, for the payment duty itself. Section 11(4)(g) runs until the promoter transfers physical possession of the project to the allottee or the association. The proviso then keeps the promoter on the hook for anything it collected and did not pay.

The buyer also has a timing duty. Section 19(10) says every allottee shall take physical possession of the apartment within a period of two months of the occupancy certificate issued for it. Section 19(5) gives the allottee the right to have the necessary documents and plans, including those of common areas, after physical possession is handed over. Taking possession promptly, and collecting those documents, gives you a clear, documented date for when the promoter's payment duty under Section 11(4)(g) ended.

The association matters here too. Section 11(4)(d) makes the promoter responsible for providing and maintaining essential services, on reasonable charges, until the association of allottees takes over maintenance. Section 11(4)(e) requires the promoter to enable the formation of an association or society of allottees under the applicable laws, and in the absence of local laws, within three months of a majority of allottees having booked. Section 19(9) asks every allottee to participate in forming it.

Our checklist on what Mumbai flat buyers should check in an occupancy certificate pairs well with the steps below.

What should a Mumbai buyer collect at possession?

Paper that proves who paid what, and when. These steps follow directly from Sections 11(4)(g) and 19.

1. Get an itemised statement from the promoter of every amount collected from you for taxes, utilities, maintenance and ground rent.
2. Ask for receipts or challans showing that the promoter paid the municipal tax and utility bills for the period before possession.
3. Note the exact date of physical possession in a signed possession letter, since the promoter's payment duty runs until then.
4. Take possession within two months of the occupancy certificate, as Section 19(10) requires of allottees.
5. Collect the documents and plans, including common area plans, that Section 19(5) entitles you to after possession.
6. Ask for written confirmation of the status of any project loan or charge over your building before final payment.
7. If a bill for the pre-possession period arrives later, send it to the promoter in writing, citing the proviso to Section 11(4)(g).

What can a buyer do if the promoter does not pay?

Use the record you built. The proviso says the promoter continues to be liable for unpaid outgoings and penal charges even after transfer, and is liable for the cost of legal proceedings taken by the authority or person owed the money. A buyer who receives such a demand should first write to the promoter with the itemised statement and receipts showing the amounts were paid to it.

If that does not resolve it, Section 31 allows any aggrieved person to file a complaint with the Real Estate Regulatory Authority for a violation or contravention of the Act, and Section 61 allows a penalty of up to five per cent of the estimated project cost for contraventions of provisions other than Sections 3 and 4. How a particular municipal or utility body handles a bill in the meantime is governed by its own rules, so respond to any official notice on time while you pursue the promoter.

The clause works best when buyers know it before handover. Ask the questions at possession, keep the paper, and a pre-possession bill becomes the promoter's problem, as the Act intends.

Frequently asked questions

Who pays municipal tax on a new flat before possession under RERA?

Section 11(4)(g) of the RERA Act requires the promoter to pay all outgoings it has collected from allottees, including municipal or other local taxes, until it transfers physical possession to the allottee or association. Under Section 19(6), the allottee must pay their share of such charges at the proper time as agreed.

What happens if the builder collected charges but did not pay them?

The proviso to Section 11(4)(g) says a promoter that fails to pay outgoings collected from allottees before transferring the project continues to be liable even after the transfer, along with penal charges and the cost of legal proceedings taken by the authority or person owed the money.

Does Section 11(4)(g) cover the builder's project loan?

Yes. The outgoings listed in Section 11(4)(g) include mortgage loan and interest on mortgages or other encumbrances related to the project. If the promoter does not clear them before transferring the project, it remains liable for them afterwards under the proviso to the clause.

How soon must a buyer take possession after the occupancy certificate?

Section 19(10) of the RERA Act says every allottee shall take physical possession of the apartment, plot or building within two months of the occupancy certificate issued for it. Section 19(5) entitles the allottee to the necessary documents and plans, including common areas, after possession.

Last updated 2026-10-25. PropNewz Team.