Ownership transfer fee can’t be more than 10000/- in Housing Societies

Various Co-operative societies in the country charge an Ownership Transfer Fee every time someone sells his apartment. These charges may vary from Rupees Ten Thousand to few lacks in some case and they are generally referred as gate money / entry fee / development fund / transfer fee / common good fund. Till date, these charges are arbitrarily decided by the societies and are mostly included in their bylaws. Anyone who refuses to pay is threatened with disconnection of basic services like electricity and water connection.

Time and again the authorities have tried to emphasize that Transfer Charges should be capped under 10000/- only. In 2014, the Punjab and Haryana High Court passed a judgment based on the Delhi High Court’s 2009 order to stop this practice immediately and all the Cooperative house building, group housing and maintenance societies etc. shall not charge more than 10000/- as the transfer fee.

Why do the societies charge the Transfer Fee?

The rationale behind such charges is the documentation the society needs to do. Unlike Group Housing societies, the co-operative societies are required to manage all the title related documentation. In Group Housing societies, this is the responsibility of the Authorities and the Registrar.

This is not applicable on Builders and Under Construction projects

If you read the viral news article which says that “Ownership transfer is now capped at rupees 10000 and court have directed that if developers charge more than 10000 as transfer charges, action will be taken against them”. We may cut your party short here, this order does not apply to the developers or under construction projects.

Transfer charges by builders

Basically, this order is only related to Co-operative Societies registered under Delhi Cooperative Societies Act, 1972 and Delhi Cooperative Societies Rules, 1973 / any other state co-operative act Or Group Housing complexes that are being managed by societies registered Society Registration Act.

The case in the High Court of Punjab & Haryana

The buyer purchased an apartment in Sujjan Vihar, AWHO, Sector 43, Gurgaon. He was asked to deposit 1,00,000/- for obtaining provisional membership of the society which he deposited. Later, he filed a petition asking the society to refund 1,00,000/-

Court’s Observations

At this stage, reference can be made to an order passed by the High Court of Delhi in Smt. Kusum Lata Gupta and others Vs. Registrar Cooperative Societies, wherein while considering the charging of entry fee from the transferee/purchaser of the flat from the original owner, the demand of  1,00,000/- was held to be misconceived and unjustified under Rule 77 of the Delhi Co-operative Societies Act and a direction was given that 10,000/- shall be paid by each of the transferees towards transfer fee, as agreed to by all of them and the balance amount, if any, shall be appropriated towards any present or future dues payable to the society.

Pursuant to the aforesaid judgment passed by the Delhi High Court, the office of the Registrar, Co-operative Societies, Haryana, Panchkula, issued a circular dated 09.05.2008 (Annexure P-15), whereby a direction was given that the Co-operative Societies should stop the practice of charging different rates for transfer of membership and they should not charge more than `10,000/- as transfer fee. Relevant part of this direction is reproduced as under:-

“It is, therefore, ordered to stop this practice immediately and all the Cooperative house building, group housing and maintenance societies etc. shall not charge more than `10,000/- as the transfer fee. The by-laws of the societies be suitably amended immediately and the compliance report be sent to this office. Any society demanding more money as prescribed above should be viewed seriously and suitable action against the management would also be initiated under the various provisions of the Act. The concerned competent field officers should immediately redress the grievance of the members in this context.”

The Order

In view of the judgment passed in Smt. Kusum Lata Gupta’s case (supra) and circular dated 09.05.2008  issued by the Registrar, Co-operative Societies, Haryana, Panchkula, letters dated 20.02.2009 and 25.03.2009  whereby respondent society demanded 1,00,000/- from the petitioner, are set aside and a direction is given to adjust the amount as in the account of the petitioner towards future dues, if any.

Copy of the Order : CWP_14234_2010_09_05_2014_FINAL_ORDER

Delhi High Court’s Observation in Smt. Kusum Lata Gupta’s case ( W.P.(C)  14758/2004)

The respondent societies could not have demanded or levied a hefty amount of rupees one lac and above from those transferees. Accordingly, we direct that Rs. 10,000/- shall be paid by each of the transferees towards transfer fee as agreed to by all of them and the balance amount, if any, standing in the credit of the members of the society shall be appropriated towards any present or future dues payable to the society and the remaining amount, if any, shall be refunded by the concerned societies to the individual members within a period of two months from today failing which, interest @ 9% shall be payable on the said amount from the date of default.

Order Copy: Smt. Kusum Lata Gupta And Ors. vs Registrar Cooperative Societies

The Deputy Commissioner of Gurgaon Order

The office of Deputy Commissioner of Gurgaon issued an order dated 31/12/2015 directing registrar to ensure that all the societies can not charge more than 10000/- as transfer charges. In case, anyone is forced to pay exorbitant  transfer fee he may approach the police for the redressal of his grievance. This is applicable for all the residential units in condominiums, group housing societies and cooperative housing units wherever is applicable.

DC Gurgoan Order on Ownership Transfer Charges

Conclusion

While we already have orders from Delhi and Chandigarh Hight Courts, it is clear the no society in Haryana and Delhi can charge more than 10000/- as ownership transfer charges. This order is against the AWHO which should make it applicable in other states where AWHO operates. For other states, the buyers must insist on not paying such charges and if needed move a petition in concerned HC stating existing laid down guidelines by other courts.

As far as developer’s group housing projects are concerned, this particular order is not applicable. 

One thought on “Ownership transfer fee can’t be more than 10000/- in Housing Societies

  • May 25, 2016 at 10:23 pm
    Permalink

    Dear Team,

    While I appreciate your endeavour to enlighten innocent buyers of their rights by covering almost all aspects of the real estate sector, I shall be thankful if you could explain various documents (right from the beginning till its completion or rather handing over of possession), which a layman buyer should insist for from the builder/developer before making any payment/signing BBA till accept offer of possession. If there is a way by which such documents could be verified/authenticity of such documents could be established (apart from banks funding that particular project, which generally have hand in glove with the developers) instead of falling prey to the developers/builders’ tactics.

    (J.P. Singh)

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