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.
The allotment letter is a document that is given by the builder to the buyer when a property is booked. The letter contains facts and figures of the property, payment options and other charges applied for maintenance, added amenities etc. Normally, it is only issued after a payment of 15 percent of total value of the property. It also gives you information about the construction details and plans, architecture details and certain other specifications of the project, the date of delivery etc. 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.
Why is this necessary?
Usually, at the time of a bank loan application, the allotment letter that will have the description of the subject property that is being sold/bought by the two parties is required to be handed over. 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.
Source: Chennai realty