Project & Payment
What is a Society Transfer Fee?
The society wants a share of your sale. In some states, there is a legal limit on how much — and a great many societies charge more than it.
The short answer
When a flat in a co-operative society changes hands, the society charges a TRANSFER FEE.
And often a TRANSFER PREMIUM on top — which can be a great deal larger.
In Maharashtra, the model bye-laws CAP the transfer premium. Many societies charge more anyway — and members pay, because they do not know there is a cap.
Find out what applies in your state, and check it.
What it is — and it is usually two things
| Charge | What it is |
|---|---|
| Transfer FEE | A modest administrative charge for processing the transfer of shares. |
| Transfer PREMIUM | The big one. A payment to the society's funds, on the transfer. This is where the money is, and where the disputes are. |
| Entrance fee | A nominal fee for the incoming member. |
| Share transfer fee | Nominal. |
| NOC charges | Sometimes levied. Sometimes not lawful. |
The transfer PREMIUM is the number that matters. It can run into lakhs, and it is frequently the subject of a dispute at exactly the moment a sale is trying to complete.
The cap — and it is worth knowing
Under the model bye-laws for co-operative housing societies in Maharashtra, the transfer premium is capped — and the cap is a fixed sum, not a percentage of the sale price.
It has been the subject of government notifications and litigation, and the settled position has been that a society cannot demand more than the prescribed maximum as a condition of the transfer.
And yet societies routinely demand far more — sometimes a percentage of the sale price, sometimes lakhs — because members do not know there is a cap, and because a seller mid-sale will pay almost anything to get the NOC.
Check the current cap in your state, and in your society's registered bye-laws, before you agree to pay anything.
A society CAN:
• Charge the prescribed transfer fee and premium
• Require its dues to be cleared before it issues an NOC
• Require the proper procedure to be followed
A society generally CANNOT:
• Demand a premium above the statutory cap, where one applies
• Demand a ‘voluntary donation’ as a condition of the NOC — a donation that is a condition is not voluntary
• Refuse the transfer arbitrarily
• Refuse a buyer on discriminatory grounds
The 'voluntary donation' is the classic device. It is asked for constantly, and it is very often simply the cap being circumvented.
Who pays it?
Whoever the parties agree. There is no fixed rule, and it is a negotiating point.
- Often it is split between buyer and seller.
- Sometimes the seller bears it, as the cost of obtaining the NOC.
- Sometimes the buyer, as a cost of acquiring.
Agree it, in writing, BEFORE you agree the price. Because if it emerges late, it is a fight — and it is a fight at exactly the moment neither party can afford one.
What to do
- Ask the society, in writing, what it will charge — every head, itemised.
- Check the society's REGISTERED bye-laws. What do they actually say?
- Check the statutory cap in your state, if there is one.
- If the demand exceeds the cap — say so, politely, in writing. Cite the bye-law and the notification.
- Do not pay a 'voluntary donation' as a condition of the NOC. If it is a condition, it is not voluntary — and that is the point.
- Agree who pays, in writing, before agreeing the price.
- If the society refuses unreasonably, there are remedies — the Registrar of Co-operative Societies, and the co-operative courts. They are slow, but they exist, and societies know it.
A society knows exactly when to raise the transfer premium: when your buyer is ready, your money is committed, and you cannot afford a delay.
Which is precisely why you must ask the question EARLY — on the day you decide to sell, not when the NOC is the last thing standing between you and completion.
Get the society's demand in writing, itemised, before you market the flat. Then you can argue about it while you still have time to argue.
Frequently asked questions
What is a society transfer fee?
A charge levied by a co-operative housing society when a flat changes hands. It is usually two things: a modest transfer FEE for processing, and a transfer PREMIUM — which is the big one, and which can run into lakhs.
Is there a cap on the society transfer premium?
In Maharashtra, the model bye-laws cap it — and the cap is a fixed sum, not a percentage of the sale price. The settled position has been that a society cannot demand more than the prescribed maximum as a condition of transfer. And yet societies routinely demand far more, because members don't know there is a cap and because a seller mid-sale will pay almost anything to get the NOC. Check the current position in your state.
Can a society ask for a voluntary donation?
It can ask. But a 'donation' that is a CONDITION of the NOC is not voluntary — and that is the point. It is the classic device for circumventing a statutory cap on the transfer premium, and it is asked for constantly.
Who pays the society transfer fee?
Whoever the parties agree — there is no fixed rule. Often it is split. Agree it in writing BEFORE you agree the price, because if it emerges late it becomes a fight at exactly the moment neither party can afford one.
When should I ask the society about the transfer fee?
On the day you decide to sell. A society knows exactly when to raise it: when your buyer is ready, your money is committed, and you cannot afford a delay. Get their demand in writing, itemised, before you market the flat — then you can argue about it while you still have time to argue.