Housing Society Problems & Solutions: Collector Fees, Transfer Premium and Forming a CHS with Minimum Members
Shirish Shanbhag 21 March 2024
Among the various expenses that home-buyers are expected to bear are transfer charges or collector's fees if the cooperative housing society (CHS/Society) is built on land owned by the district collector. The requirement to pay such transfer charges depends on various conditions, including the city or state where the concerned property is located. The law is unclear about which party, whether the buyer or the seller, should bear such charges. Usually, the payment is made after a mutual understanding is achieved between both parties. 
This week, I will address one such concern about the payment of collector's fees. I will also clarify doubts about the process of transferring a flat when one of the joint owners has expired and, in another case, when the joint owners want to relinquish their share while they are still alive. Finally, I will explain the process of forming a CHS with the bare minimum number of flats or members.
Payment of Collector Fees and Transfer Premium in Sale of Flat
Question: When we want to sell a flat in Mumbai, do we have to pay 'collector's fees'. If yes, how is the rate to be calculated and who would have to pay for it, whether it would be the buyer or the seller? Any other relevant information relating to this issue will be much appreciated.
Answer: Please ask your Society whether your Society's building is on private land or the collector's land. Suppose your Society's building is built on collector's land. In that case, before you sell your flat, your Society should write a letter to the district collector asking him how much transfer premium you should pay the collector for selling your flat. Subsequently, you should pay the requisite premium in the district collector's office, allowing you to acquire a no objection certificate (NOC) to sell the flat.
After you sell the flat, you will pay Rs25,000 as a transfer premium to the Society to transfer your flat's share certificate in your flat buyer's name. For both such premiums, one to the collector and the other to your Society, you and your buyer can mutually decide who will pay it or whether you would equally share the expenses.
There is no law stating who should ideally pay the transfer premium (buyer or seller) in the sale of a flat.
Rules for Formation of Society
Question: I live in a building with four floors and each floor has a single flat. So in total, there are four flats. Now, I understand that we might not officially be eligible to form a CHS. But is there any way we can still do so?
Managing common expenses has become problematic daily. Some flat-owners own multiple vehicles and have claimed parking spots without paying any additional maintenance. Parking is also done haphazardly, causing inconvenience to others. A flat-owner insists that he purchased 100sqft (square feet) of the parking area when he purchased the flat. Such issues have become challenging to manage on a day-by-day basis. What can be done?
Apart from these concerns, the original property owner's name is still on 7/12 extract and on the property card. If we cannot form a CHS, should we get each individual flat-owner's name added to the 7/12 extract and the  property card ?
Answer: It is possible to form a CHS if a minimum of three out of four flat-owners are ready to form the Society. Actually, to form a CHS, there is a minimum requirement of five flats. If a building has less than five flats, then it should get an architect's certificate for the building, wherein the architect needs to attest that:
(1) Another flat cannot be constructed above the fourth floor of your building, as the building is not strong enough to take the additional flat's weight. OR,
(2) No additional floor space index (FSI) could be found on your building's plot to build an additional flat.
The first reason is very good and convincing, but if FSI on plot is really unavailable, then use the second reason. 
With that architect's certificate, you can apply for CHS with the deputy registrar of cooperative societies in your area. Four flat-owners will be the chairman, secretary,  treasurer and managing committee member for your newly formed CHS.
If only three persons come forward to become the committee members of your CHS, then there is simply no need for the additional managing committee member's position in your Society.
We will not be answering queries posted in the comments. Only questions sent through the Moneylife Foundation's Legal Helpline will be answered. If you want to seek guidance or ask questions to Mr Shanbhag, kindly send it through Moneylife Foundation's Free Legal Helpline. Here is the link: https://www.moneylife.in/lrc.html#ask-question
Transfer of Ownership after Death of a Joint Owner
Question: A flat is in the joint name of a couple, one of whom has recently expired without making any nomination. The legal heirs are two sons and two daughters, while the heirs remains the surviving joint owner. This joint owner has approached the Society to transfer 50% share of the deceased in his name. The other legal heirs are willing to provide an affidavit-cum-indemnity letter to absolve the Society against any conflicts or responsibilities arising in the future. What are the procedures to be followed for transmission in this case?
Answer: All legal heirs of the deceased joint buyer and the surviving joint owner of the said flat should make a 'release deed' on a Rs500 non-judicial stamp paper by releasing their right on the joint deceased owner's share. This release deed has to be further registered with the sub-registrar of assurances office, where the registration fees are Rs1,000.
With a copy of this release deed and its Index-2, the Society will transfer said flat to the surviving joint owner as its sole owner. For this transfer, this owner will have to pay Rs600 to the Society by a crossed cheque, Rs100 as membership entrance fee and Rs500 as membership fee. There is no transfer premium of Rs25,000 which needs to be paid for this transfer.   
Transfer of Ownership from Living Joint Owners
Question: My mother and sister registered a release deed from their ownership right in favour of myself. Now, I have 60% ownership right in this flat, while 40% of the share remains with my brother, who has been unwilling to relinquish his share. The secretary has not been transferring the ownership because all members, including the unwilling brother, should be present to complete the necessary formalities.
Answer: A release deed cannot be made by the living joint owners of a flat. Instead, let your mother and sister do a gift deed together for their share in the jointly-owned flat. Your brother can continue to hold 40% of the share on said flat while signing as a confirming party to the aforementioned gift deed.
With a copy of this gift deed and its Index-2, Society will transfer 60% of the share in your name, with 40% remaining in your brother's name, thereby deleting the names of your mother and your sister.
Disclaimer: The guidance provided in these columns and on our Legal Helpline is on the sole basis of the facts provided by the reader/questioner and does not amount to formal legal advice in any form whatsoever. 
(Shirish Shanbhag has an MSc in Organic Chemistry, a Diploma in Higher Education, and a Diploma in French and has completed his LL.B. in first class in 2021. Before his retirement, he was a junior college teacher at Patkar College from July 1980 to May 2012, teaching theoretical and practical chemistry. Post-retirement in 2012, he started providing guidance and counselling to people on several issues, specifically focusing on cooperative housing society-related matters. He has over 30 years of hands-on experience in all matters about housing societies and can provide out-of-box solutions for any practical issue.)
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