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Old 3rd October 2010, 16:09   #1
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Default Can a Housing Society charge you for ownership transfer.

In my housing society (its an apartment owners association) there is a rule that does not make any sense to me.

If you purchase a flat, then Rs 5,000 is charged as Buyer's share.
If you sell a flat, then Rs 5,000 is charged as Seller's share.

So in effect everytime the ownership changes, Rs 10,000 is collected by the owner's association.

Is this legal?

I tried googling in vain for such a rule.
I will highly appreciate any links to law or similar cases.

Thanks.

Last edited by bblost : 3rd October 2010 at 16:13.
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Old 3rd October 2010, 17:09   #2
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Originally Posted by bblost View Post
In my housing society (its an apartment owners association) there is a rule that does not make any sense to me.
In my apartment we have a similar rule. I am the owner of my apartment and not a tenant and this applies only for owners.

When the flat owner is selling his flat, he has to pay Rs.10000 to the flat owners corpus fund. This is apart from the Rs.10,000 we agreed to contribute into the corpus fund.

There is no rule that this is mandatory. We all have agreed upon during one of the flat owners meeting as this money can be used for :-

a) Emergencies

b) Maintenance after a period of time ( fixing boring, lifts, painting exterior etc)
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Old 3rd October 2010, 17:33   #3
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Laws that govern rules like these are specific to the State.

AFAIK, MH has some good / model laws which govern the Housing Societies. And MH has published some model rules too. So, if a society has adopted the "model: rules, everybody knows what the rules are governing them. A deviation from the model rules requires approval from the authorities (sorry, dunno who). So, not many will make the deviation.

The monthly "service charge" too is regulated on basis of amenities available in the society.

I guess you are asking about AP, since you are based in Hyderabad. Try looking in the site for Hyderabad Corporation or the Local self-governance / panchayati raj / local bodies side of the AP government's site.

My guess that is that AP does not have a law governing functioning housing societies / owners' associations.

IIRC, most states have laws which facilitate registration of housing societies, and residential / commercial units owned by its members under the Indian Registration Act (the law which facilitates registration of titles). This is because land registration is a "concurrent" subject - on which both the State and central govt. can make laws. Apart from facilitating registration, I guess very little other states have touched on this subject.

That apart, when you get / spend a six figure amount on selling / buying a flat / apartment, it is the rare person who cribs about owners' associations' membership fees. (No disrespect meant for you).

Most people would have spent bigger amounts as bribes for registration and other formalities and would not bother with these funds.

And thinking of it, our residential associations are far more reasonable.

See the following two links, and search for the term "reject" in them.

New York City Luxury Homes - Buyer Tips - Stribling & Associates

Cooperatives News - The New York Times
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Old 3rd October 2010, 20:44   #4
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Quote:
Originally Posted by bblost View Post
So in effect everytime the ownership changes, Rs 10,000 is collected by the owner's association.

Is this legal?
Based on MH laws, it is completely legal. Society can charge up to 12,000 Rs every time there is change in ownership.

In Mumbai, most societies, charge around 1 lakh. Out of which 12k is charged as transfer fee and rest goes as some kind of donation to society.
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Old 3rd October 2010, 22:44   #5
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mostly its Rs25000/- as transfer fee , its the limit set by Govt. atleast that's how much we paid in thane, dont know about other states.
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Old 3rd October 2010, 23:15   #6
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Like others above said, completely legal in Mumbai. My flat which I sold in Mumbai I had to pay Rs. 25,000 and the buyer had to pay the similar amount. This is completely legal and mentioned in the MH Society bylaws
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Old 3rd October 2010, 23:33   #7
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Quote:
Originally Posted by bblost View Post

So in effect everytime the ownership changes, Rs 10,000 is collected by the owner's association.

Is this legal?
Every association is governed by a set of Bye Laws. If you are a member of that society, you have every right to grab a copy of the same and check if there is a clause to that effect.

However if your association has been in existence for quite some time, the charges might have undergone a revision. The revision must be supported by a resolution duly passed as stipulated in the Bye Laws. Ask for a certified copy of the relevant extracts of the resolution.

Logically the association must have drafted its bye laws in conformity with the local law prevalent out there. Therefore if the Bye Laws empowers the society to collect such charges, you gotta budge. This is from the legal standpoint. Hope it helps!
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Old 4th October 2010, 08:25   #8
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@bblost,

It is true that such a rule exists as per Flatowner act and the rule is fit as a bye law of the Society. The Society is no way can charge excess of Rs 25000/- for a transfer of ownership and this includes the contribution by seller as well as buyer. In effect either of the party has to shell out Rs 12500/- max. In case of overcharging the owner can approach the Society registrar and lodge a formal complaint.

However most of the societies practice charging Rs 10000/- per party as a round figure. We have included the same in our society bye laws which were framed very recently.
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Old 4th October 2010, 09:33   #9
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In Bangalore, apartment societies charge around Rs.2000 everytime somebody moves in or out, whether it is the owner or the tenant. Yes, societies can make up such rules and it is legal and binding.
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Old 4th October 2010, 09:57   #10
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Default Maharashtra Co-operative Housing Society Act

This is what the Maharashtra Act says
The maximum amount of transfer fee on the transfer of share certificate in a society under Model Bye-law No.40(d) (vii) of The Co-operative Housing Society Limited, the amount of transfer fees is to be fixed by the general body meeting. The amount should not exceed 2.5% of the difference between the book value of the flat and the price realised by the transferor on the transfer of his flat, or of Rs.25,000/- whichever is less. Further this bye-law also states that no additional amount by way of donation etc. will be taken unless it is paid voluntarily by the member.
You can check if there is any body/law governing co-operative housing societies in AP. If there is, they may have laid down some rules regarding this. If there is not, then like the others have said, you have to abide by the laws laid down by the owner's association.

-Biju

Last edited by pjbiju : 4th October 2010 at 09:58.
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Old 4th October 2010, 11:03   #11
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I think in Mumbai it is different. I think the sale / purchase itself can be done only through the association (society), there is paperwork involved and the state too has specific laws.

In TN one can sell the flat to whoever he pleases without involving the association, whose claim is limited to whatever money is due (arrears) from that particular apartment. They can't demand a transfer fee legally, but people usually pay up as the amount will be too small to contest in courts.
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