The Rs 25,000 Cap: What a Mumbai Society Can Legally Charge You at Transfer

A buyer closing a resale flat in Chembur got a surprise on the last lap. The society's managing committee, otherwise helpful, slid across a sheet asking for two lakh rupees. Part was called a transfer premium, part a building corpus donation, and part simply a welcome contribution. The seller shrugged and said everyone pays it. The buyer nearly did too, because the flat was almost theirs and no one wants a fight with the people they will live beside. Then a quick check of the society bye-laws showed that most of that demand was not legally due at all.

The short answer. A Mumbai cooperative housing society cannot charge you more than 25,000 rupees as a transfer premium when a resale flat changes hands, and it cannot levy non-occupancy charges above 10 percent of the service charges for that flat. Both limits come from Model Bye-law 38 and the Maharashtra government circular of 9 August 2001. The trade-off is social, not legal. You are within your rights to refuse an inflated demand, but you also have to live in the building, so the smart move is to ask for every charge in writing and push back politely with the rule in hand rather than after you have paid.

What can a society legally charge when a flat is transferred?

A society can charge a transfer premium capped at 25,000 rupees, plus routine, genuine dues, and nothing beyond that. When a resale flat is transferred, the incoming member joins the society, and the society is entitled to a transfer fee and a transfer premium within the limits set by the bye-laws. The premium, the larger of the two, is capped at 25,000 rupees under Model Bye-law 38 and the state circular of 9 August 2001. That figure is the ceiling, not a starting point for negotiation.

Everything else on a transfer demand should be a real, identifiable due. Pending maintenance, a share transfer fee of a small fixed amount, and any genuine arrears on the flat are payable. What is not payable is a premium above the cap wearing a different label. Societies sometimes rename the excess as a development fund, a corpus donation, or a voluntary contribution. Bye-law 38 specifically blocks extracting an excess donation or contribution under any pretext, so a new name does not make an over the cap demand legal.

A genuine voluntary contribution is a narrow thing. If a society is raising money for a specific repair and every member is asked to give the same amount, that is a collective decision, not a levy tied to your transfer. The test is simple. If the payment is demanded only because you are the incoming buyer, and it is not on the short list of lawful transfer charges, it is a premium in disguise and the cap applies. Do not let the timing of the demand, arriving just as you want the keys, turn an optional contribution into a compulsory one.

What are non-occupancy charges, and what is the limit?

Non-occupancy charges apply when an owner does not live in the flat and lets it out, and they cannot exceed 10 percent of the service charges. This is a common flashpoint for buyers who plan to rent the flat rather than move in. Some societies try to charge a slice of the rent, or a flat sum many times the maintenance, on the theory that a tenant burdens the building more. The law does not agree. The ceiling is 10 percent of the service charge component, and the Bombay High Court has upheld that limit.

For a buyer, this matters at the planning stage. If you intend to let the flat, ask the society what it currently levies as non-occupancy charges and check the figure against the 10 percent rule before you buy. A society that openly charges far above the cap is telling you something about how it will treat you as a landlord member later. Note also that close family occupying the flat is generally not treated as letting it out, so a non-occupancy charge should not arise merely because a relative lives there rather than you.

Which charges are legitimate and which are not?

The line is easier to hold when you can see it. The table below separates the charges a Mumbai society may fairly raise at transfer from the ones that commonly cross the legal limit.

Why do societies still overcharge, and why do buyers pay?

Societies overcharge because the pressure sits on the buyer at the worst possible moment. By the time the transfer reaches the managing committee, you have paid the seller, arranged the loan, and set a moving date. Saying no to a two lakh rupee demand feels like risking the whole deal over principle. That timing, not any legal strength, is what makes an inflated demand work.

The counter is preparation. Once you know the caps, an over the cap demand stops looking like a rule and starts looking like a request you can decline. You are not being difficult by asking which bye-law authorises a charge. You are doing exactly what the law expects an informed member to do. This connects to the wider society paperwork you check anyway, covered in our guide on the Mumbai society share certificate and membership transfer.

It also helps to remember that the seller is often as much a bystander as you are. The demand comes from the committee, not the person selling you the flat, so framing your questions to the society rather than the seller keeps the deal itself friendly. Put the request for a written breakup to the secretary, copy the seller, and let the paperwork do the arguing. Most committees, faced with a polite member who clearly knows the cap, quietly revise the figure rather than defend a demand they cannot justify in writing.

How should a Mumbai buyer handle the transfer charges?

Run these steps once your deal moves to the society stage. Each one keeps the charges inside the law without turning the transfer into a battle.

1. Ask the society for every proposed charge in writing, with a clear breakup and the bye-law behind each item.
2. Confirm the transfer premium does not exceed 25,000 rupees, whatever label the excess carries.
3. If you plan to let the flat, check the non-occupancy charge against the 10 percent of service charges limit.
4. Agree with the seller in writing who pays the premium, since the law caps it but does not assign it.
5. Pay only genuine arrears shown on a dated society ledger, not vague lump sums.
6. Get a receipt for every amount paid to the society, described by its correct head.
7. If a demand stays above the cap, raise it with the Deputy Registrar of Cooperative Societies for the ward.

Handled this way, the transfer stays cordial and lawful at the same time. You pay what is due, you decline what is not, and you have a paper trail if a dispute ever surfaces after you move in. That record is worth far more than the awkwardness of one email.

Where do these limits come from, and how do I confirm them?

The limits sit in the Model Bye-laws and a state circular, and your own society's registered bye-laws are the place to confirm them. Model Bye-law 38 sets the transfer premium ceiling, and the Maharashtra government circular of 9 August 2001 is the reference point for both the premium cap and the 10 percent non-occupancy limit. Current state cooperative rules continue to recognise the 10 percent ceiling on non-occupancy charges.

Because a society adopts its own registered bye-laws, ask for a copy and read the transfer and charges clauses yourself. If anything there conflicts with the caps, the statutory position and the circular prevail, and the Deputy Registrar of Cooperative Societies is the authority that oversees such disputes. Treat the society's own bye-law copy and the Registrar as your two points of confirmation before you accept any figure. This is the same discipline you bring to conveyance and title, as in our explainer on deemed conveyance for a Maharashtra housing society.

What do Mumbai buyers ask most about society transfer charges?

How much can a Mumbai society charge as a transfer premium?

Under the Model Bye-law 38 and the Maharashtra government circular of 9 August 2001, a cooperative housing society cannot charge more than 25,000 rupees as transfer premium when a flat changes hands. This cap applies to resale flats, and any demand for more, dressed up as a donation or contribution, is not legally due.

What are non-occupancy charges and how much are they?

Non-occupancy charges are what a society levies on an owner who does not live in the flat and has let it out. Under the state rules they cannot exceed 10 percent of the service charges for that flat. A society demanding a percentage of your rent, or a far larger sum, is charging more than the law allows.

Who pays the transfer premium, the buyer or the seller?

The law caps the amount but does not fix who pays it, so it is a matter of agreement between buyer and seller. In most Mumbai resale deals the buyer and seller split it or the buyer pays, but you should settle this in writing before closing. What matters is that the total the society takes stays within the cap.

What should I do if a society demands more than the legal cap?

Ask for the demand in writing with a breakup, then point the managing committee to Bye-law 38 and the state circular. If it persists, you can complain to the Deputy Registrar of Cooperative Societies for the ward. Keep the correspondence, because an inflated demand at transfer is a common but resistible pressure tactic.

Last updated 2026-09-13. PropNewz Team.