Allotment Letter: An Important document in Home Buying Process:
Thinking of booking an under-construction property? Wait! Do you know about allotment letter? If yes then go book, if not then you should read this Blog.
The first and foremost payment to be made to the builder is the booking advance (up to 10 percent of the property value) for which a receipt duly acknowledging the payment and an allotment letter is given to you. Since some builders make the booking advance non-refundable, it will do you good to be completely sure of the deal.
What is an Allotment Letter?
When we decide to purchase a flat/building, we express our preferences to the builder like the floor, the direction our building should face, or other minute details to be incorporated in the agreement to be drafted. The builder demands about 10%-15% of the value of the property as advance for booking and issues an allotment letter. This letter includes all the details regarding the flat, the payment options and any extra charges that you may have to pay in case of maintenance or additional facilities. It also includes construction schedule, house plans, delivery date and builder’s liability in case of late completion or problems after possession.
The allotment letter is a document that is given by the builder to the buyer when a property is booked. This letter will give you a strong hold in case the builder is delaying your possession. You must discuss any preferences, such as choice of floor, parking etc. before receiving the allotment letter as these options will be included in it. This is the first agreement that you sign with the builder and includes the following: -
- Booking amount
- Terms of construction
- Carpet area, built up area and super built up area
- Cost of car park if any, and other amenities such as a club house, gymnasium etc. as promised by the builder
- Final amount due from you, including all charges such as VAT, service tax, charges for amenities and car park. The costs incurred during the registration will not be mentioned in the allotment letter.
An allotment letter is an important document for the buyer. Generally, while you will be pursuing bank loan to buy a certain property, the builder/housing society issues the allotment letter to the buyer which includes details pertaining the description of the subject property being sold/bought by the two parties.
What is the significance of the Allotment Letter?
Usually, at the time of bank loan application, the allotment letter is handed to the user that will have the description of the subject property being sold or bought by the two parties. Allotment letter is vital in availing loan from the bank, as the letter mentions the amount of money which you have to pay to the builder/housing society, so that remaining amount can be financed by the bank. On the basis of this letter, generally the bank finances the remaining amount.
Although the general impression is such that the sales agreement holds supreme importance in property deals, the allotment letter comes in when you are deprived of what you were being promised.
For example, if on one of the pertinent aspect which is mentioned in the allotment letter, builder refuses to give adequate documentary proof subsequently, as a buyer you can opt not to make subsequent payment and can demand that unless builder satisfies the disputed aspect, you will not make subsequent payment. It will legally bind the builder to refund the buyer all the money that has been paid.
Why is it necessary?
At the time of a bank loan application, the allotment letter that will have the description of the subject property that is being sold or bought by the two parties is required to be handed over. This allotment letter from the builder enumerates not only the financial side of the transaction like what amount has to be paid in balance but also clarifies what are other things which builder is obliged to complete from his side such as construction schedule, house completion date, his liabilities in case of not handing over possession of house on due date etc.
It is the most important and highly needed thing for applying the home loan, as it contains the details of amount that you have to pay for the purchase of house. Hence the remaining amount can be calculated and financed from the bank. It is the most important document for applying for a loan, as it contains the details of the amount you have to pay for the purchase of your house. Thereafter, the remaining amount will be calculated and financed by the bank.
An allotment letter holds great value as it is the only document which will be with you as proof of your property dealing. If you have not been offered your dream house in time or as it was promised, then this letter will help you lead a case. An allotment letter is vital in availing a loan from the bank, as the letter mentions the amount of money which you have to pay to the builder/housing society, so that remaining amount can be financed by the bank. Generally, on the basis of this letter, the bank finances the remaining amount.
Although the general impression is that the sales agreement holds supreme importance in a property deal, the allotment letter comes in when you are deprived of what you were promised. For example, if on any one of the pertinent aspects mentioned in the allotment letter, your builder refuses to give adequate proof of document, as a buyer you can opt not to make a subsequent payment and can demand that unless he satisfies the disputed aspect, you will not make the payment. It will legally bind him to refund the money.Google+ image
Category : Flatons Advisors Blog