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Bengaluru real estate: Can housing societies charge ₹1 lakh for an NOC from resale buyers?
A Bengaluru housing society’s demand of ₹1 lakh from a resale buyer for a no-objection certificate has sparked concerns over legality and transparency
A Bengaluru housing society has allegedly demanded ₹1 lakh from a resale apartment buyer as a precondition for issuing a no-objection certificate (NOC) required for home loan disbursal.
The issue came to light after a homebuyer shared his experience on Reddit, saying that a 12-year-old resale flat priced at ₹60 lakh, already stretching affordability, came with an unexpected demand from the apartment association.
Neither the buyer nor the housing association could be contacted independently to verify the claim.
The buyer shared on Reddit that the association “refused to send anything mail, and said the 1 lakh is towards capex expenditure.”
The buyer said the demand forced him to rethink financing the house purchase altogether. Paying ₹1 lakh “unnecessarily” could push him towards self-funding it. “I am leaning towards self-funding this and avoid the NOC altogether,” he wrote.
Legal experts say that resident welfare associations have limited authority to levy such fees. While societies can collect transfer charges as defined under their byelaws, these are typically capped and cannot be arbitrarily labelled as capex contributions. Making an NOC contingent on a lump-sum payment from a buyer, especially without transparent accounting, has no clear legal backing, they said.
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These charges are not uncommon in Bengaluru, buyers say
Several Reddit users said that the practice, while questionable, is not uncommon across Bengaluru’s apartment complexes. One Redditor shared a similar experience while applying for a home loan through a bank. “The NOC price was steep, and the seller refused to pay it,” the Redditor wrote. After negotiations, the bank accepted alternative proof: written confirmation that maintenance and electricity bills were fully paid, along with payment history screenshots from the society’s gate app, allowing the loan to proceed without the NOC.
Another buyer noted that while such charges are widespread, the amount demanded in this case appeared excessive. “ ₹1 lakh for a flat worth ₹60 lakh sounds steep. It should have been around ₹60,000–70,000, though ideally it should be zero,” the buyer wrote.
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Legal experts weigh in
Calling the demand ‘outright illegal,’ Akash Bantia, an advocate, said a housing association has no legal authority to levy arbitrary charges for issuing a no-objection certificate unless there are legitimate, outstanding dues against the flat.
“Every association operates under registered bye-laws. At the time of transfer, the seller is required to clear all pending maintenance, electricity and statutory dues, and the buyer pays the prescribed membership or transfer fees as defined in the bye-laws,” Bantia said. “Beyond this, the association cannot impose additional conditions or capex-linked charges as a precondition for issuing an NOC.”
He explained that ownership of the apartment lies with the seller, not with the association, and the purpose of the NOC is limited in scope. An NOC is intended solely as a safeguard to confirm that the previous owner has cleared all dues and that there are no encumbrances, such as unpaid maintenance or electricity charges. It is not a tool for the association to extract money from incoming buyers,” he said.
According to Bantia, once the seller has cleared all outstanding liabilities, the association is legally bound to issue the NOC. “If the association refuses to do so, the seller can issue a legal notice to the managing committee, as procuring the NOC is the seller’s obligation during a resale transaction,” he said.
He said that the association also has no right to obstruct or delay the transfer of ownership between a willing buyer and a willing seller when the statutory requirements have been met. “In such cases, the buyer can insist on written confirmation from the seller that all dues have been cleared, and the association cannot lawfully intervene in the transfer process,” Bantia said, warning that arbitrary NOC demands expose associations to legal challenge and regulatory scrutiny.
(Disclaimer: This report is based on user-generated content from social media. HT.com has not independently verified the claims and does not endorse them.)
