Upon the death of a member in a Co-operative Housing Society, a significant issue arises – determining the successor to the shares and interests of the deceased member in the society’s capital and property. Disputes in Co-operative Housing Societies often revolve around this matter.
The Maharashtra Co-operative Societies Act, 1960, and Maharashtra Co-operative Societies Rules, 1961 provide two options for this purpose:
- Transfer to the Nominee of the deceased member.
- Transfer to the Legal Heirs of the deceased member.
The Standard Byelaws of Co-operative Housing Societies outline the procedures under Byelaws 34 and 35.
Before delving further into the subject, it’s essential to grasp several key concepts:
- Definition of “Housing Society”: Under Section 2(16) of the Maharashtra Co-operative Societies Act 1960, a “Housing Society” means a society with the objective of providing its members with open plots for housing, dwelling houses, or flats, and if open plots or flats are already acquired, to provide its members common amenities and services.
Regarding the types of Housing Societies, there are three sub-types:
a. Tenant Co-partnership Housing Society. b. Tenant Ownership Housing Society. c. Other Societies according to Rule 10(5) of the Maharashtra Co-operative Societies Rules, 1961.
Tenant Co-partnership Housing Society: These societies aim to allot flats to their members where both land and buildings are held either on a freehold or leasehold basis by the society. In such cooperative housing societies, the land and building are owned by the society, and tenements in the building are allotted to members based on their contributions for use and occupation.
Tenant Ownership Housing Society: These housing societies focus on allotting plots or flats on land parcels held on leasehold or freehold basis by the society. The houses are owned by the members while the land is owned by the society.
- Member’s nature of interest in a co-operative housing society’s flat:
The court has clarified that a member’s interest in a flat within a co-operative housing society constitutes tenancy and is subject to the society’s regulations and bye-laws. Members lack a saleable interest or disposing power over the flat without the society’s consent. The ownership of the building is vested in the society and not the members. However, the Supreme Court, while maintaining the view that ownership resides with the society, has held that members have a right of occupancy, which is a type of property interest. In a tenant co-partnership society, when a member transfers shares, they are transferring the right of occupancy without any proprietary interest.
- Definition of “Flat”:
The Act doesn’t provide a specific definition of “Flat.” Generally, a flat refers to a set of rooms constituting an individual residence, typically located on one floor within a larger building, often referred to as a block of flats.
- Definition of “Transfer”:
The Transfer of Property Act, 1882, defines “transfer” as an act in which a living person conveys property to one or more other living persons or to themselves and one or more other living persons. This act involves conscious, voluntary actions during one’s lifetime. It includes individuals, companies, and unincorporated bodies. It implies a transfer is a voluntary, living person’s action.
- Definition of “Transmission”:
“Transmission” refers to succession, which involves the transfer of rights and obligations over a property to heirs or others upon the death of the flat owner. The succession of shares and interest of deceased members of a society occurs through nomination, testamentary disposition, or intestacy, following applicable legal provisions. This process aligns with the wishes of the deceased, or in the absence of explicit wishes, it follows relevant succession laws. The wishes can be expressed through nomination or a written or oral will. In cases where flats are acquired through joint ownership, typically by spouses through a Sale Deed, ownership details can be structured to specify that upon the death of either spouse, the survivor becomes the sole owner.
Regarding the transfer of a flat, two methods are employed:
- Nomination:
A nominee is a person who holds or acquires rights, property, or other liabilities on behalf of others. The nominee acts as a trustee, managing the property for the legal heirs. However, it’s essential to clarify that nomination is not the same as a will. Under the Maharashtra Co-operative Societies Act, 1960, a member can nominate a person or persons to whom their share and interest in the co-operative society will be transferred upon their death. Although the nominee is designated, they do not become the exclusive owner of the flat; the rights of other legal heirs remain intact. The legal heirs, not the nominee, inherit the flat upon the owner’s demise.
- Transfer to the Legal Heirs:
When a person with a last testament or will passes away, two scenarios apply:
I. Through Probate:
Probate is a legal process in which the court certifies the authenticity of a will. It confirms the legal authority of the executor to implement the will and the validity of the will. Probate can be granted only to the executor appointed in the will. Probate is mandatory in specific cases, such as when the will is executed by individuals of certain religious communities or when it pertains to immovable property in certain jurisdictions.
II. Without a Last Testament (Will):
In cases where a person does not leave a will, two legal instruments are relevant:
a. Letter of Administration: This official court document authorizes a person to administer the estate of a deceased person when there is no will. It grants the legal right to manage the estate, ensuring that debts and securities are properly handled.
b. Succession Certificate: This document is crucial when a person passes away without a will. It grants authority to collect debts and securities to the holder. The certificate is used to manage the disposition of the deceased’s property, transferring assets to the rightful heirs and settling debts.
In conclusion, the transfer of a flat in a co-operative housing society occurs through nomination or to legal heirs as specified in the owner’s will. Nominees act as custodians, not owners, while legal heirs inherit the property. In cases of joint ownership, careful Sale Deed stipulations can define the survivor as the sole owner. The legal framework ensures the smooth transfer of ownership and rights based on the owner’s preferences and applicable laws.
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