In the competitive real estate landscape of Bangalore, a first-time homebuyer’s journey to purchase a ₹60-lakh resale flat took an unexpected turn when the housing society demanded a ₹1-lakh "donation" for a No Objection Certificate (NOC).This situation, recently discussed in the Indian Real Estate community, highlights a growing trend of "transfer premiums" masked as capital expenditure—a practice that occupies a murky legal grey area.
Crucially, the society refused to put this demand in writing, likely aware that such exorbitant fees are often unenforceable. The society insisted it was backed by a General Body Meeting (GBM) resolution—claiming that at least four previous buyers had already complied.
Under the Karnataka Apartment Ownership Act (KAOA) 1972 and the Karnataka Cooperative Societies Act, housing societies are generally prohibited from charging excessive transfer premiums. While states like Maharashtra have a strict legal cap of ₹25,000, Karnataka lacks a uniform statutory cap, leading to a "Wild West" scenario where individual associations pass arbitrary resolutions.
Community veterans point out that a GBM resolution cannot override the law of the land. If a society demands a large sum for an NOC without a clear, documented service or administrative cost, it is often viewed by courts as illegal profiteering.
Check the Reddit post here:
However, other members like raised a red flag, suggesting that a society willing to enforce such unfair rules from the start might be a sign of deeper governance issues, warning that "it's not worth the trouble" if the committee continues to pass arbitrary laws in the future. Meanwhile another user offered a different perspective, wondering if the steep fee was a deliberate tactic to discourage "real estate traders" and ensure only long-term residents moved in. Despite the varied opinions, the consensus was clear: while fighting for your rights is essential, one must be prepared for the complex social dynamics of a gated community.
(Disclaimer: This article is based on a viral social media video and online reactions. The Economic Times has not independently verified the authenticity of the content and does not claim or endorse it.)
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The ₹1-Lakh Hurdle: Administrative Fee or Extortion?
The buyer, seeking an affordable 12-year-old property, hit a roadblock during the bank loan process. While the bank sanctioned the loan, they required an NOC from the society. The managing committee, however, conditioned the document on a ₹1-lakh payment towards "Capex Expenditure."Budget 2026 Highlights: Here's the fine print
Crucially, the society refused to put this demand in writing, likely aware that such exorbitant fees are often unenforceable. The society insisted it was backed by a General Body Meeting (GBM) resolution—claiming that at least four previous buyers had already complied.
Bypassing the Society: A Strategic Pivot
Faced with the choice of paying the "extortionate" fee or fighting it, the buyer considered self-funding the purchase to avoid the bank’s NOC requirement altogether. However, a breakthrough occurred when the bank agreed to proceed with the loan without the society’s NOC, provided the flat had no outstanding dues.Under the Karnataka Apartment Ownership Act (KAOA) 1972 and the Karnataka Cooperative Societies Act, housing societies are generally prohibited from charging excessive transfer premiums. While states like Maharashtra have a strict legal cap of ₹25,000, Karnataka lacks a uniform statutory cap, leading to a "Wild West" scenario where individual associations pass arbitrary resolutions.
Community veterans point out that a GBM resolution cannot override the law of the land. If a society demands a large sum for an NOC without a clear, documented service or administrative cost, it is often viewed by courts as illegal profiteering.
Check the Reddit post here:
Society asking for 1 lakh for NOC
byu/Fun-Sentence4756 inindianrealestate
Community Reaction: "Burn the Bridges or Fight the Bully?"
The reaction from the real estate community was a mix of strategic advice and cautionary tales, with many users rallying behind the buyer's decision to bypass the society's demands. One prominent voice emphasized that the burden of securing an NOC lies solely with the seller, noting that a General Body Meeting (GBM) resolution cannot override the actual law of the land. They encouraged the buyer to stay firm, stating, "You're not an owner yet, so dealing with the association is not your problem."However, other members like raised a red flag, suggesting that a society willing to enforce such unfair rules from the start might be a sign of deeper governance issues, warning that "it's not worth the trouble" if the committee continues to pass arbitrary laws in the future. Meanwhile another user offered a different perspective, wondering if the steep fee was a deliberate tactic to discourage "real estate traders" and ensure only long-term residents moved in. Despite the varied opinions, the consensus was clear: while fighting for your rights is essential, one must be prepared for the complex social dynamics of a gated community.
(Disclaimer: This article is based on a viral social media video and online reactions. The Economic Times has not independently verified the authenticity of the content and does not claim or endorse it.)
