Indians have always been savvy with real estate investments and consider a home to be their greatest tangible asset. In a growing economy, it is not uncommon for homeowners to resell their residence for a good profit, the most common reason for transfer of shares in a housing society. Other than that, residences see transfer of shares if the owners pass it on as inheritance or in the event of the death of the original member, transfer ownership to other family members, pay off debts in the form of property or other personal reasons. A flat in a housing society could change multiple hands in its entire lifecycle. Model bye-laws have extensive provisions for such exchanges; these rules if followed duly make the transfer of shares a fairly easy and unencumbered procedure. In this article, we will list down all the steps a member needs to follow while transferring ownership of his residence.
What are the pre-conditions before the transfer of shares in a housing society?
- The person who intends to transfer his shares has to give fifteen days’ written notice to the society.
- The transfer should be made according to the bye-laws of the society.
- All pending dues to the society from the person who is transferring shares should be totally cleared.
- The transfer should be duly registered in the records of the society.
- No shares can be transferred unless the ownership has been held for at least one year (unless there is a court order for transfer)
- Any charge in favour of the society on the share so transferred will continue unless discharged otherwise.
What is the procedure to transfer shares in a housing society?
A 15-day written notice is to be furnished along with the name and the consent of the person to whom the shares are being transferred along with the proposed value of the transaction.
The Secretary places the request in front of the managing committee who decides if the member is eligible for such a transfer.
Whether the transfer of shares is approved or not, the Secretary has to inform the transferor within 3 days of making the final decision.
If the transfer is eligible, the following procedure has to be completed:
- Discharge of all dues pending towards the society from the transferor along with an undertaking to do so
- Share Certificate along with the application in the prescribed form for transfer of shares/interest in the capital/property of the society
- The transferor has to submit his resignation form
- A valid reason in writing for the transfer of shares (whether it’s a sale, inheritance, or any other)
- Application from membership from the person to whom the shares are being transferred
- Transfer fee of Rs 500 (or as prescribed in the bye-laws)
- Entrance fee of Rs 100
- Transfer premium as decided during general body meeting but not more than the government prescribed amount of Rs 25,000.
- A copy of the registered agreement (with required stamp duty) should be paid to the society
- An undertaking by the person to whom the shares are being transferred stating that the residence will be used for the purpose it is being owned (residential, commercial, etc)
- A NOC from a financing agency, bank, etc if the person who is transferring the shares has acquired a loan to buy ownership of the residence
- Any other declaration or undertaking that may be required by the bye-laws of the society
Procedure after the application and submission of documents
The Secretary of the society is obliged to examine and verify all documents submitted by both parties and ensure they are in compliance with the bye-laws. After that, he should present the entire paperwork to the managing committee.
If the application is rejected for whatsoever reason or approved duly, the Secretary is responsible for informing the applicant within 15 days to 3 months from the date that the decision is made. If the society fails to make any communication to the applicant, it is assumed that the transfer has been accepted and the new member is accepted by society.
Transfer shares in the event of death
In case of the transfer of shares of a deceased member, the society should transfer them to the nominated member or the legal heir of the member. The nominees are required to apply for transfer of shares within 6 months of the death of the original member. Multiple nominees can become joint/associate members after picking a main member and provide an indemnity bond to the society. If no nominee comes forward, the society puts out a public notice (along with newspaper ads), inviting claims to membership. The society examines the claims/objections and if need be, they take the help of the verdict of a Competent Court. If there are no claimants, the property is vested in the society.