We have a query with regards to a residential property purchased in name of HUF.
We have sold agricultural property in HUF name in Gujarat and against the same, we are purchasing a residential flat in the same HUF name in Mumbai, Maharashtra. The agreement will be done in the HUF name itself. However, it is brought to our notice by the housing society office that as per MCA Act clause 22, a share certificate in a housing society cannot be done in HUF name
Can the agreement be in the name of HUF and the housing society share certificate be in individual name, the individual in this case being the karta itself. Can this be a problem in future when we sell the flat? The society has provided us the above mentioned solution. However, your guidance will be useful
I C Naik
The question is where a flat purchased and owned by HUF (as it is bought from HUF funds) can its Karta be admitted to the membership of housing society, since U/S 22 HUF is not eligible to become a member of cooperative society.
The answer is No. You can explain to the Committee as under:
- The Scheme of membership of a society, as per the MCS Act 1960, goes like this. A member includes Associate and Nominal members. Associate may or may not be a joint owner and his name on the Share Certificate is not at number 1 position. U /S 2 (19) membership of society is defined:
(a) “member” means a person joining in an application for the registration of a cooperative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, or associate member;
(b) “associate member” means a member who holds jointly a share of a society with others, but whose name does not stand first in the share certificate;
(c) “nominal member” means a person admitted to membership as such after registration in accordance with the by-laws;
- If a flat is purchased jointly by two or more individuals even then both category of members have to make application for membership in prescribed forms (separate for main member Appendix No 1 and Associates No 5) since the MCR 1961 [Rule 19(1)] provides that:” No person shall be admitted as a member of a society unless,— (i) he has applied in writing in the form laid down by the society or in the form specified by the Registrar, if any, for membership”;
- If we turn to applicable Bye-Laws every applicant has to submit a copy of the stamped agreement for purchase of flat duly registered entered in to either ith the builder or another member of the society Bye-Law No 19a.(vi). This is because Bye-Law No 3(xxiv)(a) defines a member: “Member” means a person joining in an application for the Registration of a Cooperative Housing Society which is subsequently registered, or a person duly admitted to Membership of a Society after Registration and who holds the right, title and interest in the property individually or jointly;”
- Associate member is defined as “Associate Member” means a Member who holds the right, title and interest in the property individually or jointly with others, but whose name does not stand first in the share certificate; Bye-Law No 2(xxiv)(b) of Model 2014. If your CHS has not adopted 2014 Model the Associate member need not be a joint holder of the flat. In any case this definition is not supported by Section 2(19)(b) of the Act so it need not be binding.
- The Agreement should be in the name of Individual described as a Karta of So and So HUF) as the cooperative societies do not recognize HUF as a member. The Coparceners should apply as Associate Members without being parties to purchase agreement. The Coparceners change upon every birth and death in the family so joint ownership of all of them is not practical. If HUF is a contracting party membership has to be conferred on a person who has purchased the flat, which is not permissible under the MCS Act 1960.
Needless to say share of coparceners in the flat is protected under Hindu Succession Act.
