• Transfer fee for flat purchased directly from builder

I have been asked by the building society to pay a transfer fee for a flat that I have directly purchased from the builder. Since I am the first buyer from the Builder is this fee applicable to me?

While doing the purchase formalities neither the builder nor the society told me about the transfer fee, and the society issued all the relevant documents to assist the builder to sell the flat.

As per my understanding and experience of selling my previous flat the society did not release the NOC till myself and the my buyer paid Rs 12,500/- each as transfer fees.

Was it not the responsibility of the society to collect all dues from builder before issuing the NOC and what should be my plan of action to handle this situation?
Asked 3 years ago in Property Law
Religion: Christian

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12 Answers

You need to check whether the builder was admitted as a society member in respect of unsold flats 

If that was the case then the builder being a society member, when he sells the flat to a purchaser, transfer fee to the society becomes applicable 

 

Yusuf Rampurawala
Advocate, Mumbai
7762 Answers
79 Consultations

You are not liable to pay any transfer fees in respect of flat purchased from builder 

 

complain to registrar against society 

Ajay Sethi
Advocate, Mumbai
97585 Answers
7898 Consultations

Complain to registrar against society charging you transfer fees

Ajay Sethi
Advocate, Mumbai
97585 Answers
7898 Consultations

These things should be specifically stated in the contract which is signed between you and your builder. Everything wrt charges while enjoying the property and at the time of leaving.

You should send a legal notice for creating hurdles and asking for money.

Rahul Mishra
Advocate, Lucknow
14107 Answers
65 Consultations

Yes you can and i think you definitely should.

Rahul Mishra
Advocate, Lucknow
14107 Answers
65 Consultations

A transfer fee is applicable only at transfer of property not at first sale by builder. Demand of society for transfer is illegal. Even the builder is not liable to pay any transfer fee as it is the first sale.

Ravi Shinde
Advocate, Hyderabad
4468 Answers
42 Consultations

Any such resolution is not enforceable and invalid. You can challenge the same in court.

Ravi Shinde
Advocate, Hyderabad
4468 Answers
42 Consultations

Actually, after registration of society builder is also normal flat owner.

Here in your case it's society and builder's duty to tell you that transfer fees need to by paid by new buyer. So, you could have approached builder and ask to pay 12.5k each. As per law and rules of MCS it's maximum 25k or sale agreement 2% which ever is more.

 

You can ask builder to pay full amount or 50% how your financial status permit.

You can put all blame on society and builder and deny to pay. 

 

You can make complaint against them.in sub-registrar office of Co-operative society.

Ganesh Kadam
Advocate, Pune
12997 Answers
264 Consultations

Dear Sir/Madam,

There is no legal basis on which a builder can levy transfer charges on the apartment owner. You may file a case under the following provisions;

1. It violates the Transfer of Property Act, 1882; which states that ‘a transfer of property, passes forthwith to the transferee, all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof’. According to the Act, the owner alone holds the full right to property and the builder has no right, title or interest over the property post registration of the property in the name of the owner.

2. It violates the Indian Contract Act, 1872. It is an extra contractual demand made by the builder on the buyer, which infringes the buyer’s ownership rights.

3. It cannot be equated with the cooperative society’s share transfer fee. A cooperative housing society is the legal owner of the building and the plot of land and the buyer is only a share holder. A builder has no rights over the ownership of the buyer’s property and hence if the buyer wants to sell the property off to a third party, then no payment can be demanded on the part of the builder.

4. As per the complaints coming from metros like Mumbai, many builders argue that they are working on behalf of the cooperative housing society (CHS) to be formed in the future, but in reality they obstruct the formation of CHS so that they can continue to collect the transfer fee.

5. The builders threaten that upon non-payment of transfer charges, the buyer would not be able to sell off the flat. This is a punishable offense under Section 384 and 385 of Indian Penal Code (IPC).

6. The undue influence exerted by the builder is prohibited by Competition Act, 2007. Imposition of unlawful transfer fees by builders is deemed ‘abuse of dominant position’ as defined under section 4 of the Act.

Thank you,


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Anik Miu
Advocate, Bangalore
10413 Answers
121 Consultations

A cooperative housing society is the legal owner of the building and the plot of land and the buyer is only a share holder. 

Cooperative housing societies levy transfer charges and transfer premiums according to the bylaws. The transfer fee charged by the society has a legal basis as in an existing cooperative society, the owner of the flat only holds a share in the society and enjoys the right to occupy the particular flat that he owns. The transfer fee amount is decided by the members of the general body of the society.

However, it should be mentioned that a payment of more than Rs 25,000 to the society would make the agreement between the society and the buyer null and void as it would amount to unlawful consideration under Section 23 of Indian Contract Act.

 

T Kalaiselvan
Advocate, Vellore
87787 Answers
2364 Consultations

You are at your liberty to initiate legal action against the society or the the builder for this transfer fee.

however before resorting to any legal steps you may understand the underlying law in this regard.

Cooperative housing societies levy transfer charges and transfer premiums according to the bylaws. The transfer fee charged by the society has a legal basis as in an existing cooperative society, the owner of the flat only holds a share in the society and enjoys the right to occupy the particular flat that he owns. The transfer fee amount is decided by the members of the general body of the society.

T Kalaiselvan
Advocate, Vellore
87787 Answers
2364 Consultations

-   It is clear that this was not mentioned in contract/agreement signed by you.

Society also issued NOC.

It is builder responsibility to clear all dues of society until and unless it is specifically mentioned in agreement.

You check if your agreement mentioned who will bear society charges for transfer of flat.

Society had to collect this fees from builder to issue NOC or mention the same in NOC as due.

Without knowing the charge, new buyer will not know these charges.

 

 

-   You can refuse to pay and send a legal notice through lawyer to both society and builder.

You can also send complaint to registrar.

Ankur Goel
Advocate, Bangalore
454 Answers

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