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Transfer charges levied on sale of flats by builders illegal

Vinay Singh : Sat Jun 11 2011, 02:34 hrs Nest Apartments Kottayam
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In recent years it has been noticed that builders demand transfer charges when a flat-owner wants to sell the flat to someone else. This is commonly observed where there is no society or other body in charge of the affairs of the society. The question therefore arises, is this legal? When is it charged? When a person who has purchased a flat from a builder wants to sell it to a third party, the builder steps in and demands "Transfer Charges" to record the transfer. Earlier, the amounts used to be nominal ranging from Rs 25,000 to Rs 1,00,000 but with the steep rise in property prices in recent years, the builders too have gotten greedy. Today, some of them demand transfer charges ranging from Rs 200 to Rs 1,000 per square foot. Flat owners did not mind paying a token amount whether or not it was legally payable, but today many of them are questioning the right of the builder to levy such a charge. Transfer of Property Act, 1882 Section 8 of Transfer of Property Act, 1882, 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. This means that the builder no longer has any right, title or interest in the flat post the signing and registration of the agreement and the buyer enjoys full ownership and control over the property. This is in sharp contrast to cooperative societies and apartment owner's associations which are constituted under different laws and are governed by their own bye-laws. Transfer Charges by Society A cooperative society, in fact, is the real owner of the flat and building and the member only holds shares in the society and enjoys the right to occupy the particular flat. When a flat in an

existing society is transferred, the society charges 'transfer fees' and 'transfer premium' in accordance with its bye-laws. In Maharashtra, transfer fees are fixed at Rs 500 and transfer premium can range from zero to Rs 25,000 as the members may decide in the General Body. It is important to note that there is a legal basis for levying these charges under the law whilst transferring the shares.