Transfer fee, transfer premium, and the documents a society must hold when a member sells

A flat in your building has been sold. The buyer is waiting for his name on the share certificate. The outgoing member has handed over possession, and the committee is asking him to sign the transfer forms and pay a premium he says is too high. Someone on the committee is asking whether an NOC is needed before the sale can go through, and whether the buyer's registered, stamped agreement has to be filed with the society at all.

This is bye-law 38 territory. Almost every transfer dispute a committee sees traces back to one of its sub-clauses.

The notice, and the eligibility check

The process starts with the outgoing member, not the committee. Under bye-law 38(a), a member transferring his shares and interest in the society's capital/property must give the Secretary 15 days' written notice, in the prescribed form, with the proposed transferee's written consent attached.

Bye-law 38(b) puts the Secretary on the clock: the notice must go before the next Committee meeting, noting whether the member is prima facie eligible under Section 29(2)(a) of the Act. If ineligible under Section 29(2)(a) and (b), bye-law 38(c) requires the Secretary to tell him within 8 days.

No Objection Certificate — not required unless asked for

Does the society need to issue a formal NOC before a transfer proceeds? Bye-law 38(d) answers directly — a "No Objection Certificate" of the society is not required to transfer shares and interest from transferor to transferee. If either party wants one anyway, they apply, and the Committee decides on merits within one month. A committee stalling a transfer for want of an NOC it never had to issue is delaying over a document the bye-law says isn't needed.

What the transferor and transferee must actually file

Bye-law 38(e) lists eleven items the outgoing and incoming member must between them submit:

1. 1Transfer application, with the Share Certificate — bye-law 38(e)(i)
2. 2Transferee's membership application — bye-law 38(e)(ii)
3. 3Transferor's resignation, prescribed form — bye-law 38(e)(iii)
4. 4Registered Agreement, with stamp duty paid — bye-law 38(e)(iv)
5. 5Valid reasons for the transfer — bye-law 38(e)(v)
6. 6Transferor's undertaking to clear all society liabilities — bye-law 38(e)(vi)
7. 7Transfer fee of Rs 500 — bye-law 38(e)(vii)
8. 8Rs 100 entrance fee, paid by the transferee — bye-law 38(e)(viii)
9. 9Premium, at the rate the General Body fixes, within limits the Department of Co-operation/Government of Maharashtra prescribes by circular — bye-law 38(e)(ix)
10. 10Any NOC required under other law or government/financing-agency sanction — bye-law 38(e)(x)
11. 11Statutory undertakings/declarations, prescribed form — bye-law 38(e)(xi)

On the entrance fee, note that the two figures do not agree: bye-law 38(e)(viii) of the 2014 Model Bye-laws says Rs 100, while Rule 106C-4(a) of the 2026 amendment rules requires Rs 500 as a condition of regular membership. A committee admitting the transferee as a regular member should collect Rs 500 under Rule 106C-4(a), and record in the minutes which provision it charged under.

Item (ix) carries an explicit prohibition worth quoting to a member who complains the society is "adding extra charges": no additional amount towards donation or contribution to any other fund, or under any other pretext, may be recovered from either party. If it isn't the transfer fee, the premium, or the entrance fee, the society has no bye-law basis to collect it.

Transfer fee vs premium — not the same charge

The bye-laws define the two separately — bye-law 3(xxvi) and 3(xxvii) — and committees that conflate them end up under- or over-charging:

• •Transfer Fees — the sum payable by the transferor for transfer of his shares with occupancy right, fixed under bye-law 38(e)(vii) at Rs 500.
• •Premium — the amount payable by the transferring member, in addition to the transfer fee, at the rate the General Body fixes, capped by whatever limit the Department of Co-operation prescribes from time to time under bye-law 38(e)(ix).

Rs 500 is fixed by the bye-law itself. The premium is not — the General Body sets the rate, subject to the government's ceiling, which changes by circular from time to time. Confirm an old figure is still current before quoting it to a member.

When premium does not apply at all

A note appended to bye-law 38 carves out an exception committees often miss: the premium condition at 38(e)(ix) does not apply to a transfer to the transferor's own family member, nominee, or legal heir after death — nor to a mutual exchange of flats between members. The transfer fee and documentary requirements still apply; only the premium is off the table.

Where transfer fees and premium end up

Both are society money, not discretionary funds. Under Rule 106C-11 of the 2026 amendment rules, transfer fees, charges and premiums received on a membership transfer go into the society's Reserve Fund with entrance fees and allocated surplus — general reserves, not a fund the committee spends at will.

Stamp duty and registration — outside the society's remit

One thing your committee should never quote a figure on: the stamp duty on the sale/transfer instrument, and the fee for registering it, are fixed by the Maharashtra Stamp Act and the Registration Act, and are paid to the government — not the society. The society's only role, under bye-law 38(e)(iv) and Rule 106C-4(b) of the 2026 amendment, is to hold the Registered Agreement with stamp duty paid — or, for the buyer's own membership application, a certified copy of that duly stamped and registered agreement. The current stamp-duty rate, any cess, and the registration fee must be confirmed against the current Stamp Act schedule or ready-reckoner for the year of the transaction — never assumed from an old file.

Committee refusal, and the three-month clock

Bye-law 39(b) limits what a committee can refuse a transfer for: non-compliance with the Act, Rules or Bye-laws, or any other law or a government order issued under statutory powers — and nothing beyond those. Bye-law 39(c) puts a deadline on the committee's own inaction: undecided within three months of receipt, and the transfer is deemed accepted and the transferee deemed admitted as a member, under Section 22(2) of the Act. A committee that doesn't reply loses its chance to object on the application itself — though bye-law 39(d) still voids a transfer made in contravention of the Act, Rules or Bye-laws.

What your committee should do

1. 1On the bye-law 38(a) notice, calendar bye-law 39(c)'s 3-month clock at once — don't let the file sit.
2. 2Check eligibility at the next meeting (bye-law 38(b)); if ineligible, notify in writing within 8 days (bye-law 38(c)).
3. 3Don't withhold processing for want of an NOC — required only if either party asks (bye-law 38(d)).
4. 4Collect the full bye-law 38(e) document set — including the registered, stamped agreement, or the certified copy Rule 106C-4(b) requires for the buyer's membership application.
5. 5Charge exactly Rs 500 transfer fee plus the General-Body-fixed premium within the current government limit — nothing else — and check the family/nominee/heir/exchange exception.
6. 6Book both to the Reserve Fund (Rule 106C-11), not a discretionary account.
7. 7Tell the member in writing that stamp duty and registration go to the government, not the society, and the committee cannot waive, reduce or collect them.