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Allotment Letter


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An allotment letter is an important document during the purchase of a flat in India. If a person is booking a property that is under construction, then an allotment letter is provided by the builder to the prospective buyer. This letter is very important for the buyer.


Most buyers apply for a bank loan to purchase any property; this is when the allotment letter plays a major role. It describes the property sold/bought by the respective parties. The allotment letter carries the details/specifications of the project. An allotment letter is issued once the buyer pays 15% of the property value to the developer/builder.


Allotment letter details

The allotment letter carries the following details:


  • Details regarding the flat
  • Payment options

  • Booking amount

  • Any extra charges like maintenance charges, additional facility charges etc. to be borne by the buyer.

  • Terms of construction

  • Construction schedule

  • House plan

  • Carpet area, built-up area, super built-up area

  • Amenities promised by builder like club house, car parking, gymnasium, etc.

  • Final amount due from the buyer inclusive of charges such as VAT and ST.

  • Delivery date

  • Delayed possession

  • Builder's liability in case of late completion or problems after possession.


If the buyer makes any specific choices regarding flooring tile options, parking etc, those details may also be included in the allotment letter. Therefore consider all options before getting the allotment letter.


Allotment letter importance

Allotment letter is very important as it mentions the following details:


  • This letter contains the facts and figures about the property and is the most important document for procuring a bank loan.

  • Elaborates on the construction details and plans, architectural details etc.

  • The amount of money to be paid to the builder / society.

  • It gives the bank a clear estimate of the loan amount that has been requested for. Banks generally allot requested loans based on the amount mentioned in the letter.

  • Even though the sale agreement is the primary sale document, an allotment letter can come in handy as proof when promised amenities have not been provided as specified by the builder.

  • An allotment letter is the only document for an unfinished property as a proof of property dealing.


Sale Agreement

Also known as agreement of sale, a sale agreement comprises the terms and conditions of sale of a property by the seller to the buyer. The terms and conditions include the amount for which the property is being sold and the date of payment of the same. This document is very important while purchasing a property as it ensures hassle free transaction of the property. This is the base document on which the sale deed is drafted. Even though Indian Law has not made it mandatory for a written sale agreement, it is prudent to make one for hassle free property transaction.


Sale refers to transference of ownership of property in exchange of money paid or promised to be paid in part or as whole. If a buyer is purchasing a site/land for construction of an independent house, the sale agreement is referred to as construction sale agreement. If the buyer is purchasing an apartment, it is referred to as the sale agreement. The most important step is to get the sale agreement registered for it to hold validity.


The terms and agreements included in the sale agreement must be understood, agreed upon and followed by both the buyer and the seller. Sale deed which is a part of the sale agreement document is given to the buyer by the seller once the seller has completely paid the agreed amount. This document needs to be scrutinized thoroughly before signing it as nothing can be countered once it has been signed.


A property sale agreement is highly important as it lays down a framework for both the buyer and the seller.


  • The property sale agreement, in India is governed by the Indian Contract Act, 1872, The Registration Act, 1908 and the Transfer of Property Act.

  • A sale agreement is essential and is the base for any property transaction, immaterial of who is selling or buying the property.


Clauses within a sale agreement

There are various inclusions in a sale agreement referred to as clauses. The clauses mentioned in the sale agreement are the guidelines on how the transaction would proceed. The clauses include the following:


  • Description of the property being purchased or sold

  • The contact details of the buyer and seller

  • The negotiated price

  • Mode/manner of payment agreed upon

  • Whether payment is to be made in cash, in part or as whole

  • Time frame for the payment is included

  • Stipulated time within which the transaction has to be completed

  • Provision of payment of stamp duty

  • Account of the property title

  • A few clauses pertaining only to the buyer includes details on

  • Municipal taxes

  • Maintenance charges, if any

  • Building society payment in case of an apartment


Payment terms: Price of the property, inclusive of all expenses to transfer the property, payment mode and the time of payment is also included


Stamp duty: These rates are fixed by the respective state governments and the buyer has to make sure that it has been paid to the authorities


Sale deed: An agreement between the buyer and the seller, given to the buyer once the buyer has settled the payment in full


Transfer of property title: The property is transferred to the buyer; once the buyer has settled the entire amount for purchasing the property.


Since October 1 2013, it is mandatory in Tamil Nadu to register the construction agreement along with the sale deed of UDS. Buyers have to pay 2% additional charges towards it. In fact, the registration of the UDS is done only after the construction agreement has been registered.


UDS (Undivided Share): The formula to calculate the UDS is given below:

UDS=ias/sas x Total Land Area

Where:
ias = Individual Apartment's super built-up area
sas = Sum of all Apartments' super built-up area
UDS is the percentage of the super built-up area of the apartment to the super built-up area of all apartments.

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Allotment Letter
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