Question 1

Should the building be insured for its market value or its reinstatement value, and what happens if it is under-insured?

Accepted Answer

Insure the structure for what it would cost to rebuild it today (reinstatement value), not for the flats' market price, which includes land. If the sum insured is too low, most policies cut every claim in proportion (the average clause), so even a small loss is not paid in full. The bye-laws require the society to insure its building against natural calamities, fire, flood, earthquake, third-party liability and like risks (BL 159(a)); the draft asks for "adequate insurance" (dBL 132(h)). Adequate means enough to rebuild. How to fix the sum insured: (1) get the society's architect or a valuer to estimate the current cost of construction per square foot of built-up area, including lifts, pumps, tanks, fire systems, compound wall and other common installations; (2) do not include land value: land is not destroyed by fire or flood; (3) revise the figure every few years and after major repairs or additions. The average clause, in plain terms: if the building should be insured for Rs 20 crore and is insured for Rs 10 crore, a Rs 1 crore loss may be paid at only half, Rs 50 lakh. Many policies also offer a "reinstatement value" basis that pays the cost of repair without deduction for wear, only if the sum insured is adequate and the work is actually carried out. Record the valuation and the committee's decision in the minutes.

Question 2

What does a typical building fire-and-perils policy not cover?

Accepted Answer

Usual exclusions are wear and tear and gradual deterioration, faulty construction or workmanship, damage that develops slowly such as long-term seepage, war and nuclear risks, and consequential loss. Theft, terrorism, earthquake or loss of rent may need add-ons, and every claim bears an excess. Read the schedule and the exclusions before renewing. Common exclusions and limits in property policies (check your own wording): (1) wear and tear, rust, gradual deterioration and lack of maintenance; (2) defects in design, construction or workmanship, including structural cracks that were not caused by an insured event; (3) slow seepage or leakage over time, as opposed to a sudden burst (see insurance_property_tax-303); (4) war, nuclear and deliberate damage by the insured; (5) loss of rent, extra accommodation cost and other consequential loss unless added; (6) theft and burglary unless covered, often only after forcible entry; (7) terrorism and, in some products, earthquake, as optional add-ons; (8) an excess or deductible borne by the society on each claim; (9) conditions such as prompt intimation, keeping safety systems working and disclosing commercial use of units. Keep the fire-safety systems and structural audits current: an insurer may resist a claim where a required fire certificate or repair was neglected (BL 75; dBL 75). Place the policy summary before the general body so members know what is and is not covered.

Question 3

Does the society's building policy pay for damage caused by a burst pipe or an overflowing water tank?

Accepted Answer

Usually yes, if the damage is sudden: bursting or overflowing of tanks, apparatus and pipes is a standard insured peril. Slow seepage through walls or terraces over months is normally not covered and is a maintenance matter. Damage inside a flat from its own internal plumbing is the member's responsibility. Most fire-and-special-perils wordings list "bursting and/or overflowing of water tanks, apparatus and pipes" as an insured event. What the society should do: (1) intimate the insurer promptly with photographs, as for any claim (insurance_property_tax-004); (2) separate the cause of loss (the sudden burst) from the cost of fixing the pipe itself, which insurers often exclude; (3) claim for damage to common parts and, if the policy covers the full structure, to structural parts of flats. Who pays what outside insurance: the society repairs common pipes, terrace leakage and the ceiling of top-floor flats damaged by terrace leakage (BL 158(a)); internal leakage from a toilet or sink is borne by the flat holder concerned, with intimation to the society (BL 158(b)). A member whose own contents or interiors are damaged claims under his home policy, if any, or from the person at fault. Disputes between members about leakage go to the Co-operative Court under s.91.

Question 4

Which optional covers should a society consider when renewing its building policy?

Accepted Answer

Consider earthquake (if not already included), terrorism, burglary of common equipment, public liability with an adequate limit, machinery breakdown for lifts, pumps and transformers, and electronic equipment for CCTV and access control. Choose by the building's risks and the general body's budget. BL 159(a) lists natural calamities, fire, flood, earthquake and third-party liability as risks the society must cover, so make sure flood and earthquake are actually in the policy, not assumed. Beyond that, common add-ons: (1) terrorism cover for buildings in large cities; (2) burglary and theft of common items such as pumps, brass fittings, batteries and cables; (3) public liability for injury to visitors and workers in common areas (insurance_property_tax-005), with a limit that reflects today's compensation awards; (4) machinery or equipment breakdown for lifts, pumps, generators and transformers, which fire policies do not cover when the loss is internal breakdown; (5) electronic equipment for CCTV, intercom, boom barriers and the office computer; (6) money insurance for cash in the office and in transit to the bank (insurance_property_tax-313); (7) fidelity guarantee for staff handling cash (insurance_property_tax-305). Get quotations from more than one insurer, place the comparison before the committee and, for a significant change in cost or cover, the general body. The premium is shared by carpet area (Rule 106C-12(4) item 9).

Question 5

Should the society take fidelity guarantee insurance for the accountant or manager who handles its cash?

Accepted Answer

It is a sensible supplement. The bye-laws require employees who handle cash or securities to furnish security under Rule 107B; a fidelity guarantee policy adds cover for loss from their dishonesty beyond that security. It does not replace cash limits, joint signatures and monthly checks. BL 146 (2014): every paid employee holding an office in the society and handling its cash or securities must furnish security as provided under Rule 107B. Cash in hand is limited to Rs 5,000 at the close of the day, with the excess banked within three days (BL 143), and payments above Rs 1,500 go by crossed account-payee cheque (BL 144); the bank account is operated jointly (BL 112; dBL 108(b)). A fidelity guarantee policy pays the society for loss caused by fraud or dishonesty of named employees or positions, up to the sum insured, usually provided that the loss is found within a set period and the society followed the checks it declared in the proposal. Points to decide: which positions to cover (accountant, manager, cashier; committee members are usually outside standard cover); the sum insured, related to the largest cash and cheque flows; and the controls to declare truthfully. A claim will need an audit or inquiry report and often a police complaint. Losses caused by office-bearers are pursued under s.88 (surcharge) and the criminal law.

Question 6

Does the society need insurance for its watchmen, liftmen and housekeeping staff in case they are injured at work?

Accepted Answer

Staff employed directly by the society are its employees. Under the Code on Social Security 2020 (in force from 21 Nov 2025) an employer must pay compensation for injury at work to the employees listed in its Second Schedule, which include watchmen in any establishment and persons maintaining electric fittings in a building. An employees' compensation policy covers that liability. Staff supplied by an agency are the agency's employees; the contract should require the agency to insure them and show proof. The Employees' Compensation Act 1923 was repealed and replaced by Chapter VII of the Code on Social Security 2020, brought into force on 21 Nov 2025 (S.O. 5319(E); s.164(1) item 1). Section 74: if personal injury is caused to an employee by accident arising out of and in the course of employment, the employer must pay compensation, except for injury disabling for three days or less and, short of death or permanent total disablement, injury caused by drink or drugs or wilful disregard of safety rules. For Chapter VII "employee" means only the persons in the Second Schedule (s.2(26), third proviso): relevant entries include a watchman in any factory or establishment (item xxxiii), a person maintaining, repairing or renewing electric fittings in a building (item xxxi), and any employee to whom the 1923 Act applied before the Code (item l). Where a worker is eligible for ESI dependants' or disablement benefit, he cannot claim employees' compensation from the employer (s.41(7)(a)). ESI applies to an establishment employing ten or more persons, and EPF to one employing twenty or more (First Schedule). For the society: (1) direct employees: consider an employees' compensation policy naming the categories and wages; register under ESI or EPF where the thresholds are met; (2) agency staff: the work order should require the agency to comply with labour laws, insure its workers and give copies of challans and policies; keep them on file; the society may be treated as principal employer for some duties; (3) contractors doing risky work (terrace repairs, painting at height, tank cleaning): require their own workmen cover and safety equipment before work starts; (4) record every accident in the incident register and report as the law requires. Salaries of staff are service charges shared equally among flats (Rule 106C-12(2)(a)); the premium for their insurance is a related cost.

Question 7

After an insurance claim is settled, who receives the money, and can a member whose flat was damaged ask for a share?

Accepted Answer

The society is the policyholder, so the insurer pays the society. The money must be used to repair or reinstate what was insured and damaged, including structural parts of affected flats if the policy covered them. It is not income to be spent on other things or divided among members. The claim is made by the society under its policy (BL 159; dBL 132(h)). In the accounts: (1) on settlement, record the amount receivable and credit it against the repair cost or to a specific claim account, not to general income; (2) pay the repair contractors from it; any shortfall comes from the repairs or major repair funds, with general-body approval where needed (Rule 106C-13(5)(b) limits the committee's one-time spending); (3) if a flat's structural parts were covered and damaged, the society repairs them from the settlement; the member's own interiors and contents are for his own policy (insurance_property_tax-003). A member cannot demand a cash share. But a member whose covered part of the flat was damaged can ask the committee to account for how the settlement was used, inspect the claim papers as society records, and raise a dispute under s.91 if the society refuses to repair what it is responsible for. Keep the claim papers ten years (dBL 138).

Question 8

The insurer has rejected or cut down the society's claim. What can the society do?

Accepted Answer

Ask for the surveyor's report and written reasons, reply point by point, and escalate to the insurer's grievance officer. If that fails, the society may use the insurance regulator's grievance system, file a complaint before the Consumer Commission within two years, or sue. Whether the Insurance Ombudsman can hear a society's complaint should be checked. Steps: (1) Get the surveyor's final report and the insurer's decision letter with reasons. (2) Reply in writing with evidence: photographs, the fire brigade or police report, the architect's estimate, maintenance records, and the policy clause relied on. (3) Complain to the insurer's grievance redressal officer; keep the complaint number. (4) If unresolved, use the regulator's grievance portal (IRDAI Bima Bharosa). (5) Consumer Commission under the Consumer Protection Act 2019: "person" includes a co-operative society (s.2(31)(iv)) and a consumer includes one who avails of a service for consideration (s.2(7)(ii)), so a society that bought the policy can complain. File within two years of the cause of action (s.69). The forum depends on the value of the consideration paid for the service, that is the premium, not the size of the claim (ss.34, 47, 58); the Act's limits of Rs 1 crore and Rs 10 crore may be changed by the Central Government, and rules made in 2021 are understood to have lowered them to Rs 50 lakh and Rs 2 crore. (6) Insurance Ombudsman: a cheaper route for claims within its monetary limit, but its rules are aimed at individual and small-business policyholders. (7) Civil suit, or arbitration where the policy's clause applies (often to disputes on quantum only). The committee needs a resolution to pursue the claim and engage an advocate or loss assessor; report progress to the general body. Insurer timelines and interest for delayed settlement are set by IRDAI regulations.

Question 9

How should the insurance premium be accounted for and billed when the policy year does not match the financial year?

Accepted Answer

Charge to each financial year only the part of the premium that relates to it; the rest is a prepaid expense at 31 March. Bill members their share by carpet area, including the GST the insurer charged, since an unregistered society cannot recover that GST. Example (synthetic): premium Rs 1,20,000 plus GST paid on 1 October for one year. Six months belong to the current year (Rs 60,000 plus its GST) and six months to the next; show the second half as prepaid insurance at 31 March. Billing: insurance charges are apportioned by the carpet area of each flat, with any extra premium caused by storing goods in a commercial unit borne by those responsible, in proportion to their carpet areas (Rule 106C-12(4) item 9; insurance_property_tax-002). Options for collection: a monthly insurance line in the maintenance bill based on the annual premium, or recovery once a year. Either way, show insurance as its own line. GST: a society that is not registered bears the GST as part of the cost. A registered society may take credit only to the extent the policy relates to taxable supplies (tax_gst-318). Keep the policy, premium receipt, schedule of locations and the apportionment working in the insurance file; the draft keeps insurance records for ten years (dBL 138).

Question 10

How should the committee choose the insurer and policy, and does the general body have to approve it?

Accepted Answer

Get written quotations for the same sum insured and covers from at least two or three insurers, compare cover, exclusions, excess and claim service, and record the decision. A renewal on similar terms is usually within the committee's powers; a big change in cost or cover is better placed before the general body. The general body is the society's supreme authority (Rule 106C-13(3)(a)); the committee carries out its decisions and maintains the property (106C-13(2)(a)). Insuring the property is a duty of the society (BL 159(a)), and "non insuring the property of the society by the managing committee" is listed as a matter for the general body in the 2014 annexure on complaints. Fixing the rate of premium for commercial use of flats is a committee function in the 2014 table of committee duties. A fair process: (1) fix the sum insured (insurance_property_tax-301) and the covers wanted (insurance_property_tax-304); (2) invite quotations directly from insurers or through a licensed broker; ask for the full policy wording, not only a summary; (3) compare on one sheet: premium, covers, exclusions, excess, claim settlement record; (4) declare any interest: a committee member related to the agent or broker should not vote; (5) record the resolution and place the policy summary before the AGM. Renew before expiry; the draft makes timely renewal a committee duty (dBL 75(d)).

Question 11

The committee let the building policy lapse and then a fire damaged the building. Are the committee members personally liable?

Accepted Answer

They can be. Committee members are jointly and severally responsible for acts and omissions detrimental to the society, and the Registrar can order persons whose breach of trust or wilful negligence caused loss to make it good (surcharge). Whether it applies turns on the facts, such as whether funds were available and the lapse was known. BL 159(a) requires the society to insure its building. BL 136 makes committee members jointly and severally responsible for decisions taken during their term and for acts and omissions detrimental to the society's interest; dBL 143(e) takes the same approach for accounts and statutory filings. Non-insurance by the committee is a complaint matter for the general body under the 2014 annexure. Routes open to members: (1) raise it in the general body and ask for a report on why the policy lapsed; (2) ask the Registrar for an inquiry (s.83; compulsory on one-third of members' application); (3) s.88: after an inquiry or audit, the Registrar may assess damages against a past or present officer who caused loss by breach of trust or wilful negligence; (4) a dispute under s.91 in the Co-operative Court. Meanwhile the repairs still have to be done and are funded by members through the funds or a special levy. To prevent lapses, track renewal dates with reminders (the platform reminds 30 days before insurance expiry) and renew before expiry (dBL 75(d)).

Question 12

During redevelopment, who insures the building under construction and the members' interests?

Accepted Answer

Once the old building is handed over and demolished, the society's building policy has nothing left to cover. The developer should carry contractor's all-risk and third-party insurance for the new construction until handover. The development agreement should require this, name the society as co-insured or loss payee, and let the society see the policies. Neither the s.79A redevelopment directive of 2019 nor the draft 2026 bye-laws spell out insurance clauses for redevelopment, so the agreement must. Where the redevelopment is a project registered under RERA, s.16 of that Act requires the promoter to obtain the insurances notified by the State Government, including for title and construction, to pay their premium, and to hand the documents to the association of allottees. Points for the society's advocate and project management consultant: (1) contractor's all-risk (construction) policy for the full project value, covering fire, flood, earthquake, collapse and third-party injury, from start of work to occupation certificate and handover; (2) the society named as co-insured or loss payee for the rehab portion, so claim money goes to rebuilding members' flats; (3) workmen's cover for labour on site (insurance_property_tax-306); (4) proof of renewal each year, placed before the committee; (5) after possession of the new building, the society takes out its own building policy from the date of handover, with no gap. Until the old building is vacated and handed over, keep the existing policy in force. Place the insurance clauses before the general body with the draft agreement. Redevelopment procedure follows the s.79A directive of 4 Jul 2019 and Rule 106C-13(3)(i)-(j).

Question 13

Is the cash kept in the society office, or carried to the bank, covered by any insurance?

Accepted Answer

Not by the building policy. A separate money insurance policy covers cash in the office safe and in transit to the bank, up to stated limits and usually only if the declared safeguards are followed. Keeping cash small is the best protection. The bye-laws already limit the risk: cash in hand not above Rs 5,000 at the close of the day, excess banked within three days (BL 143); payments above Rs 1,500 by crossed account-payee cheque (BL 144). Online collection through the bank reduces cash further. A money policy typically covers: (1) cash in transit between the office and the bank, often with limits per trip and conditions such as two persons accompanying larger amounts; (2) cash in a locked safe, often excluding loss when keys are left on the premises; (3) loss from robbery or burglary; not shortages found on counting or loss through employee dishonesty, which is fidelity guarantee (insurance_property_tax-305). If a loss occurs: report to the police immediately, inform the insurer, record it in the cash book and the committee minutes, and let the auditor examine it.

Question 14

The municipal corporation has revised the property-tax assessment of our building. How does the society object?

Accepted Answer

File a written objection with the assessing authority within the time stated in the notice, with evidence on area, use, age and the basis of valuation. If the decision on the objection goes against the society, an appeal lies to the court named in the municipal Act, often on condition of depositing the disputed tax. Missing the deadline usually ends the challenge. Property tax is assessed under the municipal law, not the MCS Act: in Mumbai the Mumbai Municipal Corporation Act 1888 (capital-value basis), in other corporations the Maharashtra Municipal Corporations Act 1949 and its taxation rules, and in councils the Maharashtra Municipal Councils Act 1965. Each has its own notice, objection period and appeal forum. Steps for the society: (1) read the notice for the objection period and the authority; note the date of service; (2) collect evidence: sanctioned plan and occupation certificate (area), the age of the building, actual use of each unit (residential or commercial), and comparable assessments in the area; (3) pass a committee resolution to object and, if needed, engage a valuer or advocate; legal fees are service charges (Rule 106C-12(2)(j)); (4) file the objection and attend the hearing; (5) if the order goes against the society, consider an appeal within the Act's time limit: in Mumbai to the Small Causes Court under s.217 of the 1888 Act; in other corporations to "the Judge" under s.406 of the Maharashtra Municipal Corporations Act 1949. Both Acts make deposit of the disputed tax a condition of the appeal, and the Bombay High Court has upheld that condition (Walchandnagar Industries Ltd v Pune Municipal Corporation, 16 Jan 2014, s.406; Peninsula Land Ltd v BMC, 2008 (6) ALL MR 519, s.217). Where flats are assessed separately, each owner objects for his own flat; the society can coordinate a common objection on shared issues.

Question 15

While our objection or appeal against the property-tax bill is pending, must the society still pay the tax?

Accepted Answer

Generally yes. Municipal Acts often allow an appeal to be heard only if the disputed tax is deposited, and unpaid tax attracts penalties and recovery action meanwhile. Pay under protest, in writing, and claim a refund or adjustment if the society succeeds. Why paying is safer: (1) deposit of the disputed tax is a condition of an appeal against an assessment in Mumbai (s.217 of the 1888 Act) and in other corporations (s.406 of the Maharashtra Municipal Corporations Act 1949); the Bombay High Court upheld the condition and found no power to waive it (Walchandnagar Industries Ltd v Pune Municipal Corporation, 16 Jan 2014, paras 18 and 23); (2) arrears attract penalty or interest and can lead to warrant, distraint or attachment; (3) where the society is assessed as a whole, members who paid their share are exposed by a dispute they may not have chosen (insurance_property_tax-008). How to pay under protest: a covering letter stating that the payment is made under protest, without prejudice to the pending objection or appeal, quoting its number; keep the receipt and the letter together. In the accounts show the disputed portion as paid and, separately, note the refund claim. Bill members their shares as usual (Rule 106C-12(4) item 2); if a refund comes, credit it back on the same basis. If paying at once is impossible, ask the municipality in writing about instalments before the due date.

Question 16

In Mumbai, how is property tax worked out, and do small flats get an exemption?

Accepted Answer

Mumbai assesses property tax on capital value, based on the ready-reckoner rate, area, use, age and type of building, rather than on rent. The State has also exempted residential units up to 500 sq ft in Mumbai from part or all of the property tax. Check the municipal bill to see which components still apply to your flat. Since 2010 the Brihanmumbai Municipal Corporation has used a capital-value system under the Mumbai Municipal Corporation Act 1888: the value is derived from the ready-reckoner rate for the location, the carpet area and weightages for the type of building, age, floor and user category, and the tax is a percentage of that value. Residential units of up to 500 sq ft carpet area were exempted by a State decision taking effect from 2019 and extended later; the extent of the exemption (general tax only or the whole bill) has changed over time. For the society: where the bill comes to the society, bill each member what the corporation has assessed on his unit, so small flats get the benefit of their exemption instead of sharing the tax equally (Rule 106C-12(4) item 2: "as fixed by the local authority"). Common areas are shared by carpet area. Ask the ward office for the unit-wise break-up if the bill does not show it.

Question 17

One member runs an office from his flat and the municipality now charges commercial property tax. Who bears the extra tax?

Accepted Answer

The member whose use caused it. Property tax is shared "as fixed by the local authority", so if the corporation assesses that unit at a commercial rate, the higher tax is billed to that member, not spread across the building. Using a flat for business may also need the society's permission under its bye-laws. Rule 106C-12(4) item 2 apportions property tax as fixed by the local authority, with common areas by carpet area; the draft repeats this (dBL 63(a)(ii)). The same logic appears for insurance, where extra premium due to commercial use is borne by those responsible (item 9). What the society should do: (1) get the unit-wise assessment from the municipality and bill the commercial rate to that unit; (2) if the municipality has raised the whole building's assessment because of one unit's use, ask it to separate that unit's assessment; meanwhile recover the difference from the member by a committee resolution based on the assessment papers; (3) check the society's bye-laws and the sanctioned use: change of use of a residential flat may breach planning rules and the bye-laws on use of flats; the committee may act after a hearing. A member who disputes the amount billed can raise it with the committee and then the Co-operative Court (s.91); a member who disputes the municipality's classification objects to the municipality (insurance_property_tax-314).

Question 18

A mobile tower on our terrace has brought a separate property-tax demand. Who should pay it?

Accepted Answer

Municipal corporations may tax mobile towers: the Bombay High Court, following the Supreme Court, held that towers fall within "land" and "building" under the municipal Act. Who pays between the society and the tower company depends on the lease, which should make the operator bear the tax on its installation. In ATC India Tower Corporation v Pune Municipal Corporation (Bombay HC, 30 Oct 2018) the Court held that mobile towers fall within the definitions of land and building under the Act, so the corporation may levy tax on them, relying on Ahmedabad Municipal Corporation v GTL Infrastructure Ltd, (2017) 3 SCC 545. The judgment concerned the tower company; it does not decide who between an owner society and the operator bears the tax. For the society: (1) read the lease or licence with the operator; well-drafted agreements put property tax, electricity and statutory levies on the installation on the operator; (2) if the demand comes in the society's name, forward it to the operator with a demand to pay, and pay under protest if needed to avoid penalty (insurance_property_tax-315); (3) do not spread tower tax over members' bills if the operator is liable; recover it; (4) put this clause and an indemnity in every renewal. Tower rent itself is taxable non-member income and a taxable GST supply (tax_gst-007, tax_gst-323). Letting the terrace needs general-body approval and a structural safety check.

Question 19

The municipality has sent a supplementary bill for several past years. Who among past and present members pays it?

Accepted Answer

First check whether the municipal Act allows the retrospective demand, and object in time. If it is payable, the society pays the municipality. Inside the society the general body should decide the sharing: normally flat by flat as the corporation assessed each unit, billed to present members, with recovery from former owners pursued where possible. Supplementary or retrospective demands arise when an assessment was revised, an addition or change of use was found, or earlier bills were provisional. Steps: (1) examine the notice: the years covered, the reason, and the Act's limits on retrospective levy; file an objection within time if there are grounds (insurance_property_tax-314); (2) get the unit-wise break-up for each year; (3) take a general-body resolution on sharing, following the Rule's basis: as fixed by the local authority, common areas by carpet area (Rule 106C-12(4) item 2). For a unit that changed hands, the society normally recovers from the present member, who deals with his seller under their sale agreement; the society may pursue the former owner where it can; (4) consider instalments to spread the burden; (5) pay the municipality by the due date, under protest if an objection is pending (insurance_property_tax-315). Record the working and the resolution; a member who disputes his share can go to the Co-operative Court under s.91.

Question 20

Can the society get a property-tax rebate for rainwater harvesting, solar heaters, composting or early payment?

Accepted Answer

Several Maharashtra corporations have offered such rebates, but the schemes, percentages and conditions differ from city to city and change often. Check your corporation's current scheme, apply with the required certificate, and pass the benefit to the members who bear the tax. Rebates seen in Maharashtra municipal practice include concessions for rainwater harvesting, solar water heating or solar power, and on-site wet-waste composting, and discounts for paying the year's tax early or online. They are granted under the corporation's own resolutions or rules, usually on application with a certificate from its inspecting officer or an empanelled agency. Steps: (1) find the current scheme on the corporation's website or at the ward office; (2) keep the system working, since rebates are often withdrawn if an inspection finds it non-functional; (3) renew applications where the scheme requires; (4) in billing, pass the rebate to the units that received it (unit-wise assessment) or, for a rebate on common areas, to all members by carpet area (Rule 106C-12(4) item 2). Composting and rainwater harvesting may also be conditions of the building's permissions, so the rebate is a bonus on work that may be required anyway.

Question 21

The society's own office is assessed to property tax. How is that tax shared, compared with tax on other common areas?

Accepted Answer

Under the 2026 Rules, property tax, electricity and water charges of the society's independent office are part of service charges, divided equally among all flats. Tax on other common areas is shared by carpet area. Rule 106C-12(2)(b) includes in service charges, "where the society has an independent office, the property taxes, electricity charges, water charges, etc., for the same", and item 1 of the table in 106C-12(4) divides service charges equally by the number of units or flats. Other common parts assessed to tax (a clubhouse, common open areas, a watchman's cabin that is not the office) fall under the general property-tax line: "as fixed by the local authority and for common area on the basis of carpet area of each unit or flat" (item 2). In practice: (1) ask the municipality to show the society office separately in the assessment if possible; (2) put the office's tax in the service-charge expense head; (3) put the tax on other common areas in the property-tax head and share it by carpet area; (4) explain the split once in the notes to the budget so members understand the two bases. The 2014 bye-laws likewise listed the office's taxes within service charges (BL 65).

Question 22

How should property tax collected from members and paid to the municipality be shown in the society's accounts?

Accepted Answer

As a pass-through. Bill members' shares to a property-tax recovery head and charge the municipal bill to the same head, so the accounts show at a glance whether the society collected more or less than it paid. Unpaid municipal bills at 31 March are a liability; unpaid member shares are arrears. Property tax is a charge the society levies on members (Rule 106C-12(1)(b)) in order to pay the local authority. Two acceptable presentations: (1) income and expenditure: show "property tax recovered from members" as income and "property tax paid" as expenditure, side by side; (2) pass-through account: credit members' shares and debit municipal payments to one account; its balance is a small liability or asset. Either way: (a) accrue the municipal bill for the year even if paid after 31 March; (b) keep members' unpaid shares in their personal ledgers; (c) show municipal penalties or interest separately; they are recoverable from a defaulting member only if a general-body resolution provides for it (insurance_property_tax-008); (d) keep the flat-wise working in the property-tax file (BL 141). For GST, property tax collected as a statutory pass-through is left out of the Rs 7,500 test (CBIC Circular 109/28/2019; in-tax.yaml passthrough_exempt); keep it on a separate bill line.

Question 23

What changed for insurance and property tax between the 2014 bye-laws, the 2026 Rules and the draft 2026 bye-laws?

Accepted Answer

The duty to insure the building is unchanged. The big change is the sharing basis: from 22 Jun 2026 insurance, lease rent and common-area property tax are shared by carpet area, not built-up area. The draft bye-laws add committee duties to renew insurance on time and pursue claims, and keep insurance records ten years. 2014 bye-laws (mh-2014-flat-owner): building insured against natural calamities, fire, flood, earthquake, third-party liability and like risks (BL 159(a)); insurance charges by built-up area, with extra premium for commercial storage borne by those responsible (BL 66(a)(xi)); property tax as fixed by the local authority (BL 66(a)(i)); lease rent and NA tax by built-up area. 2026 Rules (mh-2026-rules, binding from 22 Jun 2026): insurance by carpet area, with the same commercial proviso (Rule 106C-12(4) item 9); property tax as fixed by the local authority and common areas by carpet area (item 2); lease rent by carpet area (item 10); the office's property tax is a service charge shared equally (106C-12(2)(b)). Draft 2026 bye-laws (mh-2026-draft): committee to obtain, renew and maintain adequate insurance and pursue claims (dBL 132(h)); timely renewal (dBL 75(d)); NA tax by carpet area "if applicable" (dBL 63(a)); insurance policies and claim records kept ten years (dBL 138). Action now: re-work every flat's insurance and property-tax share on carpet area from the Rules' date, using the architect's certificate or registered agreements.

Question 24

A member is selling his flat while his share of property tax and insurance is unpaid. Can the society recover it, and from whom?

Accepted Answer

Yes. These are society charges owed by the member, and the MCS Act gives the society a prior claim on a member's share and interest for his debts to it. Settle them before the transfer is recorded, listing them in the dues statement. After transfer the society can still pursue the former member through a recovery application. Property tax and insurance charges are among the charges a member pays the society (Rule 106C-12(1)(b), (i)). They are society dues like maintenance, not the municipality's direct claim on the member, unless the flat is separately assessed (insurance_property_tax-008). Protecting the society: (1) when a sale is notified, give the seller a written statement of all dues, including property tax and insurance shares and interest at the rate the general body fixed, not above 12 % simple (Rule 106C-12(4) item 6); (2) rely on the society's prior claim over a member's share and interest for debts due from him (s.47); (3) if the transfer goes through with dues unpaid, recover from the former member by an application in Form Y-6 for a recovery certificate (s.154B-29; Rule 106C-14), which covers charges unpaid three months after the bill; (4) a buyer should insist on a no-dues statement before completing the purchase. A dispute over the amount goes to the Co-operative Court under s.91.

Question 25

Is the society required to insure the building? What should the policy cover?

Accepted Answer

Yes. The 2014 bye-laws say the society shall insure its building against natural calamities, fire, flood, earthquake, third-party liability and similar risks. The draft 2026 bye-laws make obtaining, renewing and pursuing claims under adequate insurance a duty of the managing committee. Not insuring is a matter members can raise in the general body. BL 159(a) requires the society to insure its building or buildings "necessarily" against the risk of natural calamities, fire, flood, earthquake, third-party liability and the like. The draft 2026 bye-laws put it among the committee's duties to "obtain, renew and maintain adequate insurance of the Society's property and pursue insurance claims wherever necessary" (dBL 132(h)), and to ensure timely renewal (dBL 75(d)). Insurance charges are a head of the charges the society may levy (BL 64(xii); Rule 106C-12(1)(i)); how they are shared is in insurance_property_tax-002. The general body is the final authority on insurance of society property, and "non insuring the property of the society by the managing committee" is listed as a matter for the general body in the bye-laws' annexure on complaints (2014 annexure item f(v); dBL annexure (F)(v)). What a sensible policy covers (practice, not law): the structure and common installations (lifts, pumps, tanks, transformer and panels, fire systems, solar plant, CCTV) for their reinstatement value, not the market value of the flats; fire and allied perils, storm, flood and inundation, earthquake, and burglary of common equipment; public liability for injury to visitors and third parties in common areas. Ask the insurer to list every building and wing, update the sum insured after major repairs or additions, and note any commercial units (see -002). The committee should place the renewal and claims history before the AGM, keep policies and claim records for ten years (dBL 138(d)), and obtain general-body approval for the choice of cover where the bye-laws require it.

Question 26

How is the building insurance premium shared among the flats? We have a shop that stores goods.

Accepted Answer

Under the 2026 Rules the premium is shared by the carpet area of each flat or unit. If the premium goes up because goods are stored in a unit used for commercial purposes, the extra premium is borne by those units in proportion to their carpet area. The 2014 bye-laws used built-up area instead of carpet area. Rule 106C-12(4), table item 9 (insurance charges): "as per the carpet area of each flat", with a proviso that any increase in premium due to storing specific goods in a flat or unit used for commercial purposes is shared by those responsible, in proportion to the carpet areas of their units. The draft 2026 bye-laws repeat this (dBL 63(a)(ix)). The 2014 bye-laws had the same rule on built-up area (BL 66(a)(xi)); from 22 Jun 2026 the Rule's carpet-area basis applies (formation_byelaws-014). How to do it: get the insurer to show the base premium and the loading for the commercial risk separately (ask for a premium break-up in the quotation). Share the base premium across all units by carpet area; share the loading only among the commercial units whose use causes it, again by their carpet area. Example (synthetic): base premium Rs 60,000 on 30,000 sq ft total carpet area = Rs 2 per sq ft, so a 600 sq ft flat pays Rs 1,200; a Rs 9,000 loading for two shops of 400 and 200 sq ft is split Rs 6,000 and Rs 3,000. Fixing the rate of premium for commercial use of flats is a committee function listed in the bye-laws' table of committee duties. Carpet areas should come from the registered agreements or the architect's certificate; record them in the unit register so bills are consistent. Disputes over the share go to the Co-operative Court under s.91.

Question 27

Does the society's building insurance cover damage to my flat's interiors and belongings?

Accepted Answer

Usually not. The society insures the structure and common property. Your furniture, fittings you added, appliances and valuables need your own home-contents policy. Damage caused by another member's leak or negligence is a claim against that member. The bye-laws oblige the society to insure "its building" (BL 159(a)); the draft 2026 bye-laws speak of "the Society's property" (dBL 132(h)). Neither extends to a member's movable property or improvements. Members maintain the internal finishes and fixtures of their own flats at their own cost (BL 67(b) / 158(b); dBL 46), so a policy for those is the member's choice and cost. Read the society's policy schedule (members can ask for a copy): some building policies cover the whole structure including internal walls and plaster of flats; contents are almost never included. Practical steps: take a home policy covering contents (and your interiors, if the society's policy does not); for a let-out flat, the owner insures the fittings and the tenant his own belongings. Standard home products approved by the insurance regulator cover fire, storm, flood, earthquake and similar perils; theft and accidental damage are usually add-ons. If water from the flat above or a fire started in a neighbour's flat damages your interiors, the neighbour is responsible (see repairs_structure-001); your own insurer, if you have one, pays and may recover from him. A dispute between members about such damage goes to the Co-operative Court under s.91 or a civil court.

Question 28

There has been a fire (or flooding) in the building. How should the society make an insurance claim?

Accepted Answer

Make the site safe, inform the insurer at once in writing, and preserve evidence: photos, videos, the fire brigade or police report and the damaged items. Cooperate with the surveyor, submit the claim form with estimates and bills, and keep the committee and members informed. If the insurer delays or underpays, escalate to its grievance officer, then the Insurance Ombudsman or a consumer commission. Steps that protect the claim (practice and policy conditions; check your policy's wording): (1) Safety first — call the fire brigade (101) or disaster control; isolate electricity and gas; do not let members re-enter until the structure is checked. For a fire, the fire brigade's report is usually required; for theft or suspected arson, a police report. (2) Intimate the insurer immediately, in writing (email or portal), with the policy number and a short description; policies set short time limits for intimation. (3) Preserve evidence — photograph and video before anything is moved; keep damaged equipment until the surveyor has seen it; take only emergency steps needed to prevent further loss and keep their bills. (4) Surveyor — the insurer appoints a licensed surveyor; give access, the list of damaged property, repair estimates from the society's architect or vendors, maintenance records and the asset register. (5) Claim documents — claim form, policy copy, fire brigade/police report, estimates, final bills, committee resolution authorising the claim and the bank mandate. The committee can decide urgent repairs within its spending power (Rule 106C-13(5)(b)); larger reconstruction needs general-body approval. (6) Record everything — the draft 2026 bye-laws require insurance claim records to be kept for ten years (dBL 138(d)) and put pursuing claims on the committee (dBL 132(h)). If the claim is rejected, delayed or underpaid: write to the insurer's grievance officer, then approach the Insurance Ombudsman (for claims within its monetary limit) or the consumer commission. Damage to members' own interiors and contents is claimed on their own policies (insurance_property_tax-003). If the fire started from a member's flat through negligence, the insurer may pursue him after paying.

Question 29

A visitor slipped in the lobby, or a delivery person was hurt by a falling object. Is the society liable, and does insurance cover it?

Accepted Answer

The society can be liable if the injury was caused by poor upkeep of the common areas it maintains. That is why the bye-laws list third-party liability among the risks to insure. A public-liability cover pays compensation and legal costs within its limit. If a member caused the injury, for example by something falling from his balcony, he is liable himself. The society maintains the common areas — staircases, lobbies, lifts, compound, parapets (BL 67(a) / 158(a); dBL 45), and must insure against "third party liability" (BL 159(a)). A person injured because of a hazard the society knew or should have known about (wet floor with no warning, broken railing, loose plaster, faulty lift) may claim compensation from the society in a civil court or consumer forum. Lift accidents are also governed by the Maharashtra Lifts, Escalators and Moving Walks Act 2017, which requires reporting of accidents to the Lift Inspector. A public-liability add-on to the building policy (or a separate policy) covers such claims up to the limit of indemnity, including defence costs. Tell the insurer immediately of any incident that may lead to a claim; do not admit liability or promise payment without the insurer's consent. Where a member, occupant or his contractor caused the injury (a flower pot falling from a balcony, debris from renovation), the liability is his; the society may recover any loss it suffers from him (dBL 166(b)). Keep an incident register and CCTV footage; the draft 2026 bye-laws treat CCTV records as society records.

Question 30

Why is property tax included in my maintenance bill, and how is my share worked out?

Accepted Answer

Where the municipal corporation or council sends one property-tax bill for the whole building to the society, the society pays it and recovers each member's share through the maintenance bill. Each unit's share is the tax the local authority fixes for that unit; tax on common areas is shared by carpet area. Property tax is one of the charges a society collects from members (BL 64(i); Rule 106C-12(1)(b)). Its sharing basis is "as fixed by the local authority" (BL 66(a)(i)); the 2026 Rules add "and for common area on the basis of carpet area of each unit or flat" (Rule 106C-12(4) item 2; dBL 63(a)(ii)). In practice the municipal assessment usually values each flat separately (by area, use, floor and age), even when the bill goes to the society. So the society should obtain the flat-wise assessment list from the municipal ward office and bill each member the tax on his own unit, not an equal share and not a share of the total by area alone. Tax assessed on common parts (club house, society office, commercial hoarding income, if any) is divided by carpet area. Commercial units usually carry a higher rate; that difference stays with them because the local authority fixed it. Property tax for a society's independent office is part of service charges (Rule 106C-12(2)(b)). Members may inspect the municipal bill and the society's working. If the society over-recovers or misallocates, raise it with the committee and the general body; a dispute about the amount a member owes the society goes to the Co-operative Court under s.91. Objections to the municipal assessment itself go to the municipal authorities under the municipal Act, within the time the Act allows.

Question 31

Can each flat get its own property-tax bill instead of one bill to the society?

Accepted Answer

That is for the municipal corporation or council, not the society. Many municipalities assess flats separately and will issue individual bills on application, usually with the society's no-objection and proof of ownership. Once a flat is billed individually, the member pays the municipality directly and the society collects only the tax on common areas, if any. Property tax is levied under the municipal law (the Mumbai Municipal Corporation Act 1888 in Mumbai, the Maharashtra Municipal Corporations Act 1949 for other corporations, the Municipal Councils Act 1965 for councils), and the municipality decides who is assessed. Practice varies: some corporations bill the society for the whole building; others bill each flat and send a separate bill for common areas. A request for separate assessment is made to the ward's assessment department with the registered agreement or share certificate, the society's NOC and the architect's area statement; check the local procedure. For the society: after separation, remove that flat's property tax from its maintenance bill so the member is not charged twice; keep collecting the share of tax on common areas by carpet area (Rule 106C-12(4) item 2). The committee should not refuse a no-objection without reason; a dispute about it is a society-member dispute under s.91. The society remains responsible for any tax still billed to it.

Question 32

Some members have not paid their share of property tax. What happens to the society, and how does it recover?

Accepted Answer

Where the bill is in the society's name, the society owes the full amount to the municipality and should pay it on time from its funds to avoid penalty and attachment. The unpaid share is a member's due like any other: charge interest at the general-body rate (not over 12 % simple a year) and recover it through the Registrar under s.154B-29. The municipal Acts make property tax recoverable from the person assessed and allow penalties, distraint and attachment for arrears; where the society is assessed, a few defaulters can expose the whole society. The committee should therefore pay the municipal bill in full and by the due date (and take any early-payment rebate), funding the gap temporarily from its general funds if the general body permits, rather than paying only what it has collected. Recovery from the member: the property-tax share is part of the society's charges (Rule 106C-12(1)(b)); interest on defaulted charges may be charged at the rate fixed by the general body, not exceeding 12 % simple a year (Rule 106C-12(4) item 6). Follow the usual steps — demand notice and reminders, then an application to the Registrar in Form Y-6 for a recovery certificate (s.154B-29; Rule 106C-14); see defaulters_recovery-001. Municipal penalties caused by a member's default can be claimed from him only if a general-body resolution provides for it. The society may not cut off water, electricity or lift access as a pressure tactic (defaulters_recovery-003). Where flats are billed individually by the municipality, a member's unpaid property tax is between him and the municipality, not a society due.

Question 33

The property-tax account is still in the builder's name. How do we move it to the society, and who pays the builder's old arrears?

Accepted Answer

Apply to the municipal assessment department to transfer the account to the society's name, with the registration certificate, conveyance deed (or deemed conveyance order) and the committee's resolution. Arrears for the period the builder was responsible for, including on unsold flats, are the builder's; recover them from him or raise them before MahaRERA or the courts. After registration and conveyance, the society takes over outgoings such as property tax, water charges and NA tax (the society's charges list includes each; Rule 106C-12(1)). Until then the promoter must pay all outgoings, including municipal taxes and water charges, until he transfers the property to the society (MOFA s.6; for a RERA-registered project, until he hands over physical possession, RERA s.11(4)(g)). If he fails to pay outgoings he collected from flat buyers, he stays liable for them and any penal charges even after the transfer (MOFA s.6; proviso to RERA s.11(4)(g)). Sums he collects for outgoings must be kept in a separate bank account (MOFA s.5). He also bears the outgoings on unsold flats (see builder_handover-002). Transfer (mutation) of the assessment is done by the municipal ward's assessment department; typical documents are the society's registration certificate, the conveyance deed or deemed conveyance order, the property card or 7/12 extract, the committee resolution and the last paid bill. Ask the municipality for a statement of arrears as on the handover date before accepting the account, so that the builder's arrears are identified. If the builder left unpaid property tax, the municipality may still demand it from the property; the society should pay under protest if needed to avoid attachment and claim reimbursement from the builder (MahaRERA complaint, civil suit, or as part of the conveyance proceedings). Record the claim in the handover checklist and the accounts.

Question 34

Our society pays lease rent and non-agricultural (NA) tax on the land. How are these shared?

Accepted Answer

Under the 2026 Rules lease rent is shared by the carpet area of each unit, and the draft 2026 bye-laws apply the same basis to NA tax. The 2014 bye-laws shared both by built-up area. They are real outgoings of the society and are collected through the maintenance bill. Lease rent (for land held on lease, typical of MHADA, CIDCO or Government-allotted plots) and non-agricultural tax (payable to the Collector on land put to non-agricultural use) are heads of the society's charges (Rule 106C-12(1)(j)-(k); BL 64(xiii)-(xiv)). Sharing: lease rent by "the carpet area of each unit or flat" (Rule 106C-12(4) item 10); the Rule's table has no separate NA-tax line, and the draft bye-laws share NA tax by carpet area "if applicable" (dBL 63(a)(x)-(xi)). The 2014 bye-laws used built-up area for both (BL 66(a)(xii)-(xiii)). Where the lessor revises the lease rent or demands arrears, check the lease deed and the revision order before passing the amount to members; revisions can be challenged before the lessor authority. Many areas have seen changes in how NA tax is levied under the Maharashtra Land Revenue Code, so confirm the current demand with the tahsil office.

Question 35

My flat is locked and unused. Must I still pay property tax and the insurance share?

Accepted Answer

Yes. Property tax is levied on the property whether or not it is occupied, and the insurance share follows carpet area, not use. Non-occupancy charges are separate: whether a locked flat attracts them depends on your bye-laws and general-body resolution, and they never exceed 10 % of service charges. The society's charges for property tax and insurance are shared by the bases in Rule 106C-12(4) (items 2 and 9): the tax fixed by the local authority for the unit, common-area tax and insurance by carpet area. Nothing in the Rule or the bye-laws exempts an unoccupied flat. Some municipal Acts allow a refund or remission for a building or part of it that stays vacant for a period, on application and subject to conditions; ask the ward office and apply directly if the flat is individually assessed, or through the society if the bill is in its name. Non-occupancy charges are different: they are an extra contribution from a member who does not occupy the flat, capped at 10 % of service charges (Rule 106C-12(4) item 8), and not charged where the flat is given to close relatives. The Bombay High Court read the bye-laws as covering a flat kept locked as well as one given on leave and licence (Mont Blanc CHS, 2007, para 14), so a locked flat may attract them if the society levies them (see tenants_leave_licence-004).

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