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Transfer charges levied on sale of flats by

builders illegal

Vinay Singh : Sat Jun 11 2011, 02:34 hrs

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In recent years it has been noticed that builders demand transfer charges when a flat-owner wantsto 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 inrecent 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 andin 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 onlyholds shares in the society and enjoys the right to occupy the particular flat. When a flat in an

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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 isimportant to note that there is a legal basis for levying these charges under the law whilst

transferring the shares.