In a first-of-its-kind move by a RERA authority, UP RERA has capped the processing fee for transferring unregistered inherited properties within blood relations at ₹1,000, providing significant relief to legal heirs who have often faced hefty charges from developers.
Under the revised provisions, legal heirs must submit documents such as the death certificate, succession certificate issued by a competent authority, and no-objection certificates from other legal heirs. For transfers to individuals outside the family, promoters can charge a maximum fee of ₹25,000.
Understanding transfer charges in inheritance and property transfers
Developers generally levy transfer charges when an original allottee or a subsequent buyer transfers rights in an under-construction property to another person before the execution of the final sale or conveyance deed. Since the allottee’s details are recorded in the developer’s books, any change in ownership requires updating the records and obtaining approval for the transfer. A similar situation arises when an allottee dies, and the property rights pass to legal heirs. To recognise the successor as the new allottee, developers have traditionally charged transfer or processing fees.
However, legal experts note that, in many cases, these charges were disproportionately high compared to the limited administrative work required to update records.
Why was regulatory intervention required?
The move follows a series of complaints from homebuyers and legal heirs who alleged that developers were demanding excessive sums to transfer apartments after the death of the original allottee. In several instances, fees were linked to the size of the apartment, significantly increasing the financial burden on families already dealing with bereavement.
Legal experts note that while developers may incur limited administrative costs for verifying documents and updating records, the absence of a clear regulatory framework often allows for charges that bear little relation to the actual work performed.
To address this, the 10th Amendment to the Uttar Pradesh Real Estate Regulatory Authority (General) Regulations, 2019 has prescribed a uniform cap on transfer and processing charges. The amendment also distinguishes between commercial transfers and succession-based transfers. While inheritance transfers and transfers among family members will now attract a maximum fee of ₹1,000, other transfers will be subject to a cap of ₹25,000.
According to Sunil Tyagi, Managing Partner, ZEUS Law Associates, the builder or promoter usually charges transfer charges whenever the original allottee or a subsequent transferee further transfers his rights or allotment in an under-construction property to a new transferee before the final Sale/Conveyance Deed is executed. Property rights also transfer upon the death of an allottee. Since the name of the previous allottee is recorded in the builder’s records, the new transferee is required to get their name recorded as the new allottee.
To record the change of name from the previous allottee to the new allottee, the builder collects these charges at the time of approving the transfer of allotment in favour of the new transferee. While certain administrative and processing costs may arise for document verification, compliance checks, and updating records, the absence of a clear regulatory framework has often led to excessive charges that are not proportionate to the actual work involved, he explained.
Inheritance should not become a revenue stream, say experts
The decision has been widely welcomed by legal and real estate experts, who argue that inheritance transfers should not become a source of revenue for developers.
“UP RERA’s decision is a welcome and practical reform because it addresses a problem that many families face at a very difficult time. When a homebuyer passes away, legal heirs are often forced to deal not only with succession formalities but also with developers who demand substantial amounts simply to record the transfer of the flat in the heir’s name. In many cases, these charges had no real connection with the actual administrative work involved. By capping the fee at ₹1,000, the regulator has recognised that inheritance is a legal consequence of death and not a commercial transaction that should generate revenue for a developer,” said Sonam Chandwani, Managing Partner, KS Legal & Associates.
The biggest benefit for homebuyers and their families is that it removes an unnecessary financial burden and reduces the scope for arbitrary demands. A legal heir is not purchasing the property from the developer. The heir derives rights through succession law and merely steps into the shoes of the deceased allottee. The developer’s role is limited to verifying the relevant documents and updating its records. Charging hefty transfer fees in such circumstances was difficult to justify, particularly when the full consideration for the property had already been paid by the original purchaser, she said.
She said that inheritance-related transfers should not become a profit centre for developers. Once the property has been sold and paid for, the promoter cannot treat every change in ownership as a fresh business opportunity. There is an important legal distinction between a voluntary transfer, where an owner sells the property to a third party, and a succession-based transfer that occurs automatically by operation of law. In the latter case, the legal heir is not acquiring a new right from the developer. The right already exists and passes to the deceased owner’s heirs.
“Expecting legal heirs to pay substantial transfer or administrative charges merely to establish and record that right serves little legal purpose and often results in unjust enrichment for the developer,” she said.
A first-of-its-kind move?
Chandwani notes that UP RERA appears to be among the first to expressly prescribe a nominal cap through a specific regulatory framework. States such as Maharashtra and Delhi have mechanisms for the transmission of ownership and succession-related matters, but there has not been a similarly clear and uniform RERA-led provision that fixes inheritance transfer charges at a nominal amount. That is what makes the UP approach noteworthy.
“It provides certainty, removes ambiguity and significantly limits the discretion that developers previously enjoyed in imposing charges on legal heirs. If other state regulators adopt a similar approach, it could help establish a consistent national principle that succession is a matter of legal entitlement and not a revenue-generating event for builders,” she added.
