Flat transfer: society dues must be paid first — Section 154B-7

Ramesh has agreed to sell his flat in a housing society, and the buyer has paid an advance. The buyer's natural question is simple: from what point am I the owner in the society's books, and what must happen first? The Maharashtra Co-operative Societies Act (MCS Act) answers part of this, and the answer starts with the society's dues.

What the provision says

Section 154B-7, in Chapter XIII-B, restricts the transfer of a member's share or interest. In a housing society, a transfer of a member's share or interest, or of his occupancy right, is not effective unless two things are met: (a) the dues of the housing society are paid; and (b) the transferee applies for and acquires membership of the society "in due course of time".

Two points matter. A transfer to an heir or a nominee is excepted from this restriction. And occupancy right does not include the right of a tenant or of a licensee on leave and licence basis. For leasehold properties, the proviso says the transfer is governed by the terms of the lease, so long as they are not inconsistent with the lease of the land to the society or the society's lease to its members.

Section 154B-12 adds that a member may transfer his share, right, title and interest in his property in the society by way of a registered document, following the due procedure in the rules or bye-laws.

What it means in practice

Take Ramesh's sale. The society's ledger shows maintenance dues pending against his flat. Under Section 154B-7, the transfer is not effective until those dues are paid. Clearing the dues is therefore part of completing the sale, not an afterthought, and the buyer's lawyer should ask for proof of it.

The buyer, for his part, must apply for membership and acquire it. He should not treat the registered sale document under Section 154B-12 as the end of the matter.

If Ramesh were instead passing the flat to his heir or nominee, this restriction would not apply. If he had only given the flat to a tenant on leave and licence, the licensee's right is not an occupancy right for this purpose.

What your committee should do

1. 1When a member says he intends to sell, check the ledger and list every due outstanding against the flat.
2. 2Tell the member in writing that the dues must be paid before the transfer can be effective under Section 154B-7.
3. 3Note that Section 154B-12 enables a member to transfer by registered document following the procedure in the rules or bye-laws; registration is not itself one of the two conditions in Section 154B-7.
4. 4Ask the buyer to apply for membership promptly, and keep his application on record.
5. 5Note whether the case is a transfer to an heir or nominee, a leave and licence arrangement, or a leasehold flat, because each is treated differently under Section 154B-7.