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Romil (Sr.)     24 November 2014

Transfer of flat in private builder society.

Why do I have to pay the transfer fee when selling the flat with private builder?



I googled some information and got this info, does it really violates the IPC and builders are just bullying their way in.


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.




Thanks for providing the right guideline.



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