What is the maximum transfer fee a society can charge?

Under Maharashtra's framework: a transfer fee of Rs 500 plus a transfer premium capped at Rs 25,000, applicable on sale transfers. Demands beyond this - however labeled - are excess and recoverable; other states' bye-laws set their own, typically modest, caps.

Are 'voluntary donations' at transfer time legal?

Courts have repeatedly held that donations demanded as a condition of transfer are disguised excess premium and illegal. A genuinely voluntary donation is lawful - the test is whether the transfer proceeds without it.

Who pays the transfer charges - buyer or seller?

By convention the outgoing member (seller) pays, but the parties can agree otherwise between themselves; the society's concern is receipt of the lawful amount with the transfer documents.

Do transfer charges apply to gifts within family or inheritance?

No premium applies on transfers to family members or legal heirs by gift, nomination or succession - only nominal fees for recording the change apply under the model framework.

Can a society refuse to transfer a flat?

Not arbitrarily. With complete documents, lawful charges paid and dues cleared, transfer is a member's right - refusal grounds are narrow, and an aggrieved transferee can approach the registrar.

FINANCE · 11 MIN READ

Society transfer charges: rules and limits

Selling a flat is where societies most often demand more than they are entitled to, usually framed as a voluntary contribution. This is what the rules actually permit.

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K. ManiFOUNDER, KEYMATRIXLast reviewed 31 August 2026

IN SHORT

On transfer of a flat, a cooperative society may collect the charges its bye-laws and state rules permit — typically an entrance fee, a transfer fee and a transfer premium. In Maharashtra the transfer premium is capped by state circular at ₹25,000, and demands for additional voluntary contributions as a condition of transfer have repeatedly been held improper.

What are society transfer charges?

When a flat in a cooperative housing society changes hands, the transaction has two parts. The sale itself is between buyer and seller and is governed by the sale deed and registration. Separately, the society must transfer membership — the shares and the interest in the society — from the outgoing member to the incoming one, and it is entitled to charge for that.

The permitted charges are narrow and specific. Typically they comprise an entrance fee from the incoming member, a transfer fee, and a transfer premium. Each has a prescribed or capped amount, and the total that a society may lawfully collect is generally far smaller than most sellers expect and far smaller than many societies demand.

The distinction that matters is between charges for effecting the transfer and money the society would simply like to have. The first is permitted within limits; the second is not, however it is described, and calling it a donation does not change its character where it is in substance a condition of the transfer proceeding.

Two separate transactions. The sale between the parties, and the transfer of membership by the society.
Permitted charges are specific and capped. Entrance fee, transfer fee and transfer premium.
Naming a payment a donation does not change its nature. What matters is whether it was a condition of transfer.

The legal caps on transfer charges

In Maharashtra, a government circular caps the transfer premium at ₹25,000. The transfer fee and entrance fee are separately prescribed by the model bye-laws at nominal amounts — commonly ₹500 from each of the transferor and transferee as a transfer fee, and ₹100 as an entrance fee for the incoming member. The practical upshot is that the total a Maharashtra society may lawfully collect on a transfer is in the region of ₹26,000, not the several lakhs frequently demanded.

These figures are Maharashtra’s and come from the state circular and model bye-laws, not from national legislation. Other states prescribe their own charges, and societies registered under Apartment Ownership Acts or Societies Registration Acts operate under different frameworks again. Do not carry the ₹25,000 figure across a state border without checking.

A general body resolution cannot raise the premium above the cap. This is the point societies most often get wrong: a resolution passed unanimously by every member present is still a resolution to do something the society is not permitted to do, and it does not make the excess collectible.

₹25,000 premium cap is a Maharashtra circular. Plus nominal transfer and entrance fees.
Not a national figure. Other states and other frameworks prescribe differently.
A resolution cannot exceed the cap. However large the majority that passed it.

What societies can and cannot demand

The permitted list is short. The grey area is one specific practice, and it is less grey than societies hope.

Transfer premium rules

The transfer premium is the substantive charge and the one subject to the cap. It is normally payable to the society and is commonly shared between transferor and transferee by agreement, though the society’s concern is that it is paid rather than by whom.

Societies sometimes attempt to compute the premium as a percentage of the sale consideration, which produces figures far above the cap in any Indian city. Where a cap applies in fixed rupee terms, a percentage computation exceeding it is simply not permitted, regardless of how the society characterises it.

Voluntary donations: the grey area

The widespread practice is to demand a substantial "voluntary donation" to the society’s repair or welfare fund as a condition of issuing the NOC or effecting the transfer. Courts and Registrars have repeatedly held this improper where the payment is in substance compulsory — and a payment demanded as a precondition of a transfer is compulsory whatever it is called.

A genuinely voluntary contribution, offered without any linkage to the transfer proceeding, stands on different ground. The test is linkage. If the transfer would have proceeded without the payment, it may be voluntary; if it would not, it is a charge in excess of the cap and the member is entitled to have it refunded.

THE PROCESS

The transfer process and documents

Five steps. Only step three is a legitimate basis for refusing to proceed.

Notice of intention to transfer

The outgoing member gives the society notice in the prescribed form of the intention to transfer, with the details of the proposed transferee. Some bye-laws require a period of notice before the transfer.

Application and documents

Application for transfer in the prescribed form, the incoming member’s application for membership, the original share certificate, a copy of the registered sale deed, identity and address documents, and a no-dues position on the flat.

Clear outstanding dues

Dues attaching to the flat must be cleared. This is a legitimate condition, and it is distinct from the practice of withholding an NOC to extract a payment the society is not entitled to.

Committee resolution and NOC

The committee considers the application and resolves to admit the transferee to membership. The NOC and the transfer follow from that resolution, which should be minuted.

Share certificate and register update

The share certificate is endorsed or reissued in the incoming member’s name, and the member and share registers are updated. The nomination for the new member should be taken at the same time, while it is easy.

Handling disputes over excess charges

If a society demands more than the permitted charges, ask for the demand in writing with the bye-law or circular it is made under. That request alone resolves a substantial proportion of these disputes, because a demand that cannot be sourced to a rule is one most committees will not commit to paper.

Where the demand persists, the pragmatic reality is that the seller usually needs the transfer to complete on a timetable and the society controls the pace. The approach that works is to pay under written protest — recording that the payment is made without prejudice and under objection, specifying the amount considered excessive — and to pursue recovery afterwards. That preserves the position without losing the transaction.

The forums are the Registrar of Cooperative Societies for an administrative complaint, and the cooperative court or the dispute resolution mechanism the applicable Act provides. Excess transfer charge recoveries are among the more commonly successful member claims, precisely because the caps are clear and the demands are documented.

Ask for the demand in writing. With the rule it is made under. Many demands evaporate here.
Pay under written protest if you must complete. Record the objection and the amount disputed.
Complain to the Registrar. The administrative route where a society exceeds a binding circular.
Keep every receipt. Including for anything described as a donation.

Frequently asked questions

: Under Maharashtra's framework: a transfer fee of Rs 500 plus a transfer premium capped at Rs 25,000, applicable on sale transfers. Demands beyond this - however labeled - are excess and recoverable; other states' bye-laws set their own, typically modest, caps.
: Courts have repeatedly held that donations demanded as a condition of transfer are disguised excess premium and illegal. A genuinely voluntary donation is lawful - the test is whether the transfer proceeds without it.
: By convention the outgoing member (seller) pays, but the parties can agree otherwise between themselves; the society's concern is receipt of the lawful amount with the transfer documents.
: No premium applies on transfers to family members or legal heirs by gift, nomination or succession - only nominal fees for recording the change apply under the model framework.
: Not arbitrarily. With complete documents, lawful charges paid and dues cleared, transfer is a member's right - refusal grounds are narrow, and an aggrieved transferee can approach the registrar.