Whether a service housing society can charge transfer fees?
Querist :
Anonymous
(Querist) 23 December 2019
This query is : Resolved
Sir, i stay in a flat at Ahmedabad, Gujarat. My question is can a service Housing Society can charge Transfer Fees Legally?
Sb Karma
(Expert) 23 December 2019
Yes if they have rules and they generally asked as development fees.
Querist :
Anonymous
(Querist) 23 December 2019
Sir please read its a "Service Housing Society"
Raj Kumar Makkad
(Expert) 23 December 2019
Service Housing Society can also charge for the transfer of flat if the same is mentioned in its bye-laws so better to check it and then obtain its answer.
Raj Kumar Makkad
(Expert) 23 December 2019
he legality of payment of transfer charges demanded by a society, has been tested by the courts on numerous occasions, over the past few years. The Bombay High Court, in the case of Bharatiya Bhavan Cooperative Housing Society Limited and others vs Krishna H Bajaj and others (Writ Petition No 1094 of 2004, decided on February 17, 2010) allowed the appeal filed by the society, thereby, disentitling the flat purchaser from receiving a refund of an amount of Rs 9,63,000 paid to the society at the time of sale of the flat, by way of a voluntary contribution. During the hearing of the appeal before the Bombay High Court, the flat purchaser contested that the voluntary contribution was nothing but transfer charges, which was demanded by the society, which the flat owner had no option but to pay. The Bombay High Court observed that the flat purchaser, in that case, knowing the precise legal position, contracted with the society for payment of the transfer charges of Rs 9,63,000 in the name of a voluntary contribution.
Aggrieved by the aforesaid order, the flat purchaser filed a special leave petition before the Supreme Court of India (SLP No 11266 of 2010, order decided on November 9, 2011). The SC stated that it did not fully agree with the reasons given in the aforesaid judgment passed by the Bombay High Court. However, the SC could not overturn the decision of the Bombay High Court, on the ground that the flat purchaser had not challenged the resolution that was passed by the society in fixing the amount of the transfer charges and that the challenge by the flat purchaser, was made after over two years after the payment of the voluntary donation.
Raj Kumar Makkad
(Expert) 23 December 2019
This issue of transfer charges has now been put to rest, by the order passed by the Bombay High Court in the case of Alankar Sahkari Griha Rachana Sanstha Maryadit vs Atul Mahadev and another (Writ Petition No 4457 of 2014, decided on August 6, 2018), where the Bombay High Court categorically expressed its disagreement with the judgment passed by the Bombay High Court in the Krishna H Bajaj case and held that in view of the flat purchaser taking immediate steps to challenge the transaction of payment of the transfer charges, it cannot be concluded that it was a voluntary donation but was a transfer fee paid by compulsion. In the Alankar Sahkari case, relying on the provisions of the bylaws adopted by the society and the circular dated August 9, 2001, the Bombay High Court observed that there was a ceiling of Rs 25,000 for transfer fees and that different ways were being invented by societies, to earn more money through legally impermissible means.
Raj Kumar Makkad
(Expert) 23 December 2019
The decision of the Bombay High Court in the Alankar Sahkari case, has laid the foundation for any flat owner or purchaser to challenge the exorbitant demands of transfer charges raised by a society, whether termed as a voluntary donation or otherwise. While the legal recourse and law has been fairly settled, the question that remains, is whether a flat purchaser is willing to initiate acrimonious litigation with a society where he or she hopes to stay for the foreseeable future. However, in societies where presently there is no resolution with respect to charging of transfer premium as voluntary donations or otherwise, members should oppose the passing of any such resolution, as it is against the spirit of the law. Such acts can only be stopped, if members raise their objections at the right time.
Hemant Agarwal
(Expert) 24 December 2019
1. Transfer Fees, can be demanded by ANY type of Society, PROVIDED the same is recorded in the Bye Laws of such Society and FURTHER PROVIDED the said Bye Laws are approved & registered, by the Registrar of Societies /Associations.
2. IF the above is NOT true in the Bye Laws, THEN such Society CANNOT collect any such Transfer fees, more so since most Societies Act /Laws of India, do not have any provision or say legislative laws for such Transfer Fees.
Keep Smiling .... Hemant Agarwal
VISIT: www.chshelpforum.com
T. Kalaiselvan, Advocate
(Expert) 26 December 2019
The transfer fee is payable by anyone seeking this facility.
You can find this rule in the bylaws of the society.
As per Bye-Law no. 40(d)(vii) the Society should collect transfer charges 2.5% of the difference between the book value of the flat and the price realised by the transferor on Transfer of the flat.
Both parties -- buyers and sellers -- usually have certain costs they must pay during a home purchase. The buyer typically pays for any fees relating to their mortgage loan, and the seller typically pays the agent's commission and various fees relating to the transfer of property.
