Unreasonable Transfer Charges: How Builders Are Exploiting Homebuyers
Unreasonable Transfer Charges: How Builders Exploit Homebuyers
Ethics is knowing the difference between what you have a right to do and what is right to do. Nowadays, builders have lost it, or maybe they never had it. First, they beg buyers to invest in their overpriced projects, then force them to pay an unreasonable amount of money under the guise of transfer charges when they want to sell their property.
However, transfer charges are only applicable on unregistered properties, because every crime can be legalized with a plan, and builders have found a great loophole. Transfer charges lack set parameters from the government, and that's what they exploit. As per the Transfer of Property Act, 1882, the builder has no rights post-registration and full payment.
The act states that only if you register the property, the builder has no right to levy transfer charges. The problem is that this "only if" has become a great loophole, which builders use to extort money from buyers.
It feels like your flat has been kidnapped, and now you have to pay extortion money to get it back. In this blog, we will evaluate every aspect of the term "Transfer Charges" and how buyers' literacy can help correct this or lead to set parameters.
Is There Any Legal Parameter Set by the Government for Transfer Charges?
Officially, there is no legal base or act regarding transfer charges. The Transfer of Property Act, 1882, states that the demand for transfer charges is unreasonable only if your property is registered. If your property is not registered, you are liable to fulfill these unreasonable demands.
How Are These Transfer Charges Determined?
These transfer charges are set by the builder himself. There is no parameter or base for these charges. Whether the builder wants to charge 1 lakh or 1 crore, you have to pay. You have no choice—either pay or don't sell your property.
Can Transfer Fees Be Challenged in Court?
Transfer fees can only be challenged in court if the fee is not specified or mentioned in the agreement with the builder. If it is mentioned there, you have to pay it.
Are There Any RERA Regulations Regarding Transfer Charges?
There is no specific act or RERA regulation that addresses these charges.
Why Do Builders Demand Transfer Charges?
Builders demand these charges under the pretext of processing fees for providing a No Objection Certificate (NOC). This certificate ensures that you have cleared all liabilities related to the property, and the remaining liabilities will be transferred to the next owner.
Are Builders Really Required to Demand Transfer Charges?
These charges are optional and are demanded simply to provide the NOC. For something as basic as this, buyers are forced to pay lakhs of rupees. You either pay the forcefully imposed amount, or the builder will not allow you to transfer your unit to someone else.
Even if builders want to earn some extra cash, an amount up to 50,000 could be considered reasonable. However, some builders are now demanding up to 10 lakh to transfer a 1000 sq. ft. unit, which is exorbitant.
Are Transfer Charges Only Levied on Unregistered Properties?
Generally, transfer charges are levied only on unregistered properties. However, some builders still ask for these charges on registered properties, which is certainly illegal. As the property is already registered with the government, the builder no longer has any role to play, and you are not required to pay transfer charges.
Why Are There Still No Provisions Regarding Transfer Charges?
Most homebuyers purchasing flats from big builders earn a decent amount and value their time, so they avoid getting into these disputes. On the other hand, homebuyers from middle-class backgrounds, with limited budgets, often do not want to fight with powerful builders who have exceptional wealth and influence.
Due to these issues, no one raises their voice, and the government also does not take any action. If buyers were to speak up, a uniform process regarding these charges could be established.
What government says about it ?
As per the government of India, RWA can ask for some nominal charges for registered property, and those charges are small. But developers have not rights to demand transfer charges on registered property, but still some developers demand for transfer charges, which is not valid legally and needs to be addressed by the legal authorities.
Writer's Thoughts
As responsible real estate consultants, we believe that there should be a streamlined, transparent, and uniform process regarding the transfer charges levied by developers. In the absence of a uniform norm, developers take advantage of homeowners and buyers, extracting unreasonable amounts of money in exchange for releasing their units.
If the government sets standard rates for these charges and enforces a uniform rule that every builder must follow, home buying and selling could become more affordable and competitive, rather than simply a business.
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