Society Registration: Essential Facts for Home Buyers

A cooperative housing society is formed to provide residential houses to all its incorporated members through a combined ownership of real estate residential buildings and property. A cooperative housing society or a co-op is a distinct form of home ownership different from townships, single family ownership and renting. In technical terms, a cooperative housing society can be defined as a “legally integrated group of people following similar needs of housing or its improvement based on equal assistance by all members involved”. The capital required to do so is equally shared by each member.

Usually, builders don’t pay heed to homebuyers’ demands of forming a registered cooperative housing society and in such cases, they have to begin the process themselves. They should inform the builder regarding their move for getting the society registered under the society registration act.

The Indian society registration act is an extension of ACT.NO.21 of 1860, “an act for the Registration of Literary, Scientific, and Charitable Societies”. The act was implemented when India was under colonial rule, and is still largely in force. After registration, the housing society becomes a legal entity i.e. it has the rights to enter into contracts and can sue as well as be sued.

Steps involved in forming a cooperative housing society:

• Meeting of imminent representatives: Members who have decided to form a housing society should gather and discuss all relevant intricacies involved in the procedure.

• Appointment and resolution: All members elect the chief promoter and mutually decide possible names for the society. This step involves applying to the registration authority for grant of the name proposed at the promoters’ meeting.

• Bank Account: Once the name gets approved, the registrar, along with the chief promoter and fellow members must open an account in any bank in India under the name of the proposed cooperative housing society.

• Payment of registration fee: An amount of Rs.2500 is to be paid to the Reserve Bank of India as registration fees for forming a cooperative housing society.

• Motion for registration: An application for registration of the society has to be submitted to the registrar in ‘Form A’ along with four copies of the proposed bylaws, signed by all promoting members.

A cooperative housing society holds the title for all housing property in the society (Photo credit: en.wikipedia.org)

Membership: As per the society registration act, there are several eligibility criteria to become a member of a cooperative housing society.

Entities listed here can become members of a cooperative housing society: 

• An individual competent to engage in a contract under Section 11 of the Indian Contract Act.

• Any corporate body or joint stock company constituted by law.

• Any other cooperative society or the Government.

Ownership: Broadly cooperative housing societies can be classified into two categories - the first is non-ownership or non-equity and the other is ownership or equity. A non-ownership or non-equity cooperative occupancy rights are granted as per the occupancy agreement which can also be referred as a ‘proprietary lease’ which is a lease (a lease agreement is a contract between two parties, the lessor and the lessee) in real terms. In ownership or equity cooperatives, the occupancy rights are subjected through ‘title transfer’ (a conveyance deed is executed to transfer property rights).

Management: A cooperative housing society holds the title for all housing property in the society; hence all the maintenance and repair costs are borne by it. The amount of capital raised is equally shared by all the members of the society.