• Transfer fee for residential plots

Dear Sir,

I am planning to purchase a residential gated community plot during pre-launch from a reputed builder in Bangalore. The investment is high, upto 1 cr, and i want to be sure what i am getting into.

My question is: The builder has included a clause in T&C of the Expression of Interest letter (for booking), that the transfer fee for third party sale is 2.5%. For residential plots, is transfer fee applicable? When is transfer fee applicable - After agreement is executed and before registration or is it also applicable even after registration, few years after purchase. 2.% is way too high and in the first place they should not be charging transfer fee at al and secondly, they should not be charging it for plots. Is my understanding correct?
Asked 9 months ago in Property Law from United States
Religion: Hindu
The builder is free to incorporate a condition relating to transfer fee for a third party transfer. If you do not wish to pay this then you are free to reject the proposal. Once you sign it you will be bound by it. The transfer fee is applicable only once the sale deed is executed in your favour. There is nothing in law which prevents the builder from imposing transfer fee for transfer of residential plots.
Ashish Davessar
Advocate, Jaipur
18088 Answers
447 Consultations
5.0 on 5.0
1) never purchase plot during pre launch period

2) only purchase plot when the builder has requisite permission s in place

3) transfer fees are applicable for transfer of plots 

4) charges demanded by builder are exorbitant 

5) it should not 2.5%of value of plot . 

6) request builder to reduce it to maximum Rs 50,000 or so 
Ajay Sethi
Advocate, Mumbai
23173 Answers
1217 Consultations
5.0 on 5.0
1) if builder has good track record then you can take risk if you so desire 

2)get the agreement vetted by lawyer before you sign the same 

3) it is necessary to peruse agreement forwarded by builder to advise 
Ajay Sethi
Advocate, Mumbai
23173 Answers
1217 Consultations
5.0 on 5.0
1. I think you are misunderstanding the clause "transfer fee for third party sale",

2. It stipulates that if you want to sell the property to a third party before it is registered in your name, the builder will  execute and register the sale deed in favour of the third party selected by you as your buyer and for the said act, the builder will charge an additional amount of 2.5% of the price of the property,

3. This is absolutely reasonable and in one property at Kolkata, I found it to be 3% of the total cost of the flat.  
Krishna Kishore Ganguly
Advocate, Kolkata
12084 Answers
228 Consultations
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1. It will be prudent on your part to buy plot after the same is sanctioned otherwise you may face problem later on and the developer may run away with your booking amount,

2. You can include your above clause but make it a point to include the clause of completing the project with in a fixed time and in case of failure, the interest/penalty to be paid to the buyers,

3. Also keep a clause to complete the registration within a fixed time period failing which the developer will be bound to pay interest and penalty.
Krishna Kishore Ganguly
Advocate, Kolkata
12084 Answers
228 Consultations
5.0 on 5.0
Hi, It is a new thing for asking transfer fee of 2% for third party sale , normally no such transfer fee will be applicable.

2. It is better you can get a legal opinion and proceed further.
Pradeep Bharathipura
Advocate, Bangalore
4104 Answers
133 Consultations
4.3 on 5.0
A longer waiting period may give you the opportunity to reassess the pros and cons, so this may offer limited help.
Ashish Davessar
Advocate, Jaipur
18088 Answers
447 Consultations
5.0 on 5.0
As per the circular;
In supersession of previous instructions on the subject cited above, issued vide No. PUDA-P&C-
97/2526-2537 dated 27.10.97, the transfer policy of residential / commercial plots is amended in view
of the decision taken by the Finance Committee in its 20th meeting vide Agenda item No. 20.16 as
under:-
RESIDENTIAL/COMMERCIAL PLOTS:
 The transfer fee may be charged at the rate of 2.5% of allotment price or auction price of the plot in case of residential plots and 2.5% of the auction price in case of commercial plots.
There is government circular that the societies cannot charge tranfer fee more than Rs. 50,000/- whereas it is for the societies and nt for the builder.
T Kalaiselvan
Advocate, Vellore
13969 Answers
127 Consultations
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2.5% is valid. By a Circular issued by the Commissioner of Co-operation and Registrar Co-operative Societies dated 27th November 1989, the maximum premium was increased to Rs.25,000. But it should not cross Rs. 25,000/-.  
Ravinder Pasula
Advocate, Hyderabad
316 Answers
68 Consultations
4.9 on 5.0

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