Everyday life in a cooperative housing society (CHS/the Society) often brings with it practical challenges, ranging from paperwork, documentation and compliance requirements to the use and management of common facilities. What may appear to be a small issue at first, such as a share certificate, access to toilets or the type of registration your CHS holds, can sometimes become a matter of dispute among members. These concerns are not always just about convenience; they often involve interpretation of the law, society bye-laws and the obligations of both members and the managing committee.
Here, we address some of the recurring queries raised by readers, offering guidance that is grounded in the law while also being practical for members and societies to follow. The aim is to help reduce confusion, resolve disputes amicably and ensure that societies function smoothly within the legal framework.
Can You Sell a Flat Within a Year of Transfer?
Question: On the death of my husband, I had the flat held by him in a CHS transferred to my name, based on the nomination he had made. Now, two months after the transfer, I wish to sell the flat to another buyer. The Society, while issuing the NOC, is insisting that I must hold the flat for one year before selling it, citing Rule 29 of the Maharashtra Co-operative Societies (MCS) Act. Is this correct?
Answer: The Society’s interpretation of Section 29 of the MCS Act—that you must hold the flat for one year before selling it—is not correct.
MCS Act Section 29(2) states:
“A member shall not transfer any share held by him or his interest in the capital or property of any society, or any part thereof, unless he has held such share or interest for not less than one year.”
This does not mean that a flat in a CHS cannot be sold within one year if the flat owner has a pressing need to do so. If a member wishes to sell the flat within one year of its transfer into their name, the Society can accept the application with a copy of the sale deed. However, the transfer of the share certificate to the buyer will only be completed after one year has passed since the last transfer (i.e., from your late husband to you).
In such cases, the Society will issue a no objection certificate (NOC) for the sale, stating that the share certificate will be transferred after the one-year period is completed. The Society will also accept the membership form, membership fee, and transfer premium from the buyer, but the actual transfer of shares will be recorded only after one year.
If the buyer needs a loan to purchase the flat, the bank will usually require the share certificate to be transferred in the buyer’s name. In this situation, the Society can note on the share certificate: “Transfer of share is effective from [future date, being the completion of one year from the previous transfer under MCS Act, 1960, Section 29(2)(a)].”
The bank can then place a lien on the share certificate for the loan, and the Society can confirm to the financial institution that the lien has been recorded in its records against the flat.
How to Deal with Laminated Share Certificates
Question: The concern is regarding laminated share certificates. Is it possible to do a proper delamination and who provides this service in Thane or Mumbai? Alternatively, can the owner submit the laminated share certificate and request a new one from the CHS? What is the procedure for this?
Answer: Laminated share certificates often cannot be easily delaminated without damaging the document, and hence, there is no reliable service for this. The correct procedure is to surrender the laminated share certificate to the Society. The Society will then issue a new duplicate share certificate in place of the old one. This is the accepted and valid method for dealing with laminated share certificates.
Toilet Facilities for Shops in Housing Societies
Question: We have several ground-floor shops in our Society. Most have built toilets within their shops, but one of the shops does not have a toilet. The shop staff are given access to the common toilets. Should the shop customers also be given access? The Society feels this could be a security issue, as the toilet is within the CHS premises while the shop is outside. What is the legal view?
Answer: Every shop should have its own toilet for both staff and customers. Shops without toilets can be asked to construct one, and since they are on the ground floor, construction should not be a problem. The Society’s common toilets—meant for flat servants, drivers, and security staff—cannot be used by shop staff or customers.
Premises Society vs Housing Society: Does It Matter?
Question: My residential building with around 60 residential flats and 8 shops on the ground floor is registered as a cooperative ‘premises’ society. Is it necessary to convert it into a cooperative ‘housing’ society? If yes, what is the process and who can help in this conversion? If not, will there be any challenges in the future?
Answer: Whether your building is registered as a cooperative housing society or a cooperative premises society does not make any difference. Since your Society has a few shops, it can also be registered as a cooperative premises society.
NOTE
We will not be answering queries posted in the comments. Only questions sent through the Moneylife Foundation's Legal Helpline will be answered. If you want to seek guidance or ask questions to Mr Shanbhag, kindly send it through Moneylife Foundation's Free Legal Helpline. Here is the link: https://www.moneylife.in/lrc.html#ask-question
Disclaimer: The guidance provided in these columns and on our Legal Helpline is on the sole basis of the facts provided by the reader/questioner and does not amount to formal legal advice in any form whatsoever.
(Shirish Shanbhag has an MSc in Organic Chemistry, a Diploma in Higher Education, and a Diploma in French and has completed his LL.B. in first class in 2021. Before his retirement, he was a junior college teacher at Patkar College from July 1980 to May 2012, teaching theoretical and practical chemistry. Post-retirement in 2012, he started providing guidance and counselling to people on several issues, specifically focusing on cooperative housing society-related matters. He has over 30 years of hands-on experience in all matters about housing societies and can provide out-of-box solutions for any practical issue.)
