Taking A Loan On Your Flat? Society Permission Is Mandatory In Most Cases, Know The Rules
Bombay HC Rules Housing Societies Cannot Decide Flat Ownership Disputes, Limits Role to Membership Only
Cooperative housing rules require prior approval; delay or refusal can be challenged before Registrar
Many flat owners often assume that since the property is in their name, they can freely take a loan against it. However, under cooperative housing society rules, taking prior permission from the society is generally mandatory before mortgaging a flat.
As per the provisions, if a member wishes to mortgage their flat to obtain a loan from a bank or financial institution, they must first obtain a No Objection Certificate (NOC) or permission from the housing society. Failure to do so can lead to objections from the society and complications in the loan process.
The rules also clarify what happens if the society delays or refuses permission. In such cases, the member has the right to approach the Registrar under Section 79(2)(a) of the Maharashtra Cooperative Societies Act. The Registrar can then issue directions to the society to resolve the matter.
There is also a special provision for urgent situations. If the loan is required for reasons such as education, medical emergencies or other pressing needs, the society is expected to issue the NOC without delay. The Secretary or Chairman must provide the certificate promptly, and the decision should be recorded in the next managing committee meeting.
If the society still fails to act, the Registrar has the authority under Section 79(2)(b) to appoint an authorised officer to issue the required permission. In such cases, the member may need to submit an indemnity bond.
The rules further state that once a loan is sanctioned, the society must record the bank’s charge on the flat in its official records. After the loan is fully repaid, the charge must be removed without delay once the bank notifies the society.
However, there are certain exceptions. Under Sub-rule 45, prior permission may not be required in specific cases, such as loans taken from an employer for housing purposes or from financial institutions approved by LIC and the Registrar.
Overall, while property ownership gives rights, cooperative housing rules still require members to follow due process. Understanding these provisions can help avoid unnecessary disputes and delays when seeking a loan against a flat.
