How to Pay Token Money is most frequently asked question from my clients. As i keep highlighting that token money should paid by buyer once he has clarity how he will arrange funds for the transaction. If buyer fail to arrange the funds then stands to lose the entire token money. Payment of Token Money is imp because seller will not share copy of documents for Home Loan processing till buyer pay token money. For buyer its a catch 22 situation because most of the time Token Money is paid without any legal formalities. As i mentioned, buyer carries the risk of losing money if something goes wrong. It is imp from buyers perspective to take care of all the critical points. Lets check all the imp aspects of token money through this post
How to Pay Token Money?
Token Money can be paid against either of the following instruments/documents
(a) Payment Receipt: This is most common way of paying Token Money. As token money is paid at very short notice therefore there is not much time to close the legal documentation. There is a fear in the mind of both the parties that other party should not back out from the deal. Token Money is paid/received as an assurance to close the deal. A payment receipt can be printed on 2 Rs stamp paper or 10 Rs Stamp Paper (depending on state to state). Seller can sign on Revenue Stamp to acknowledge the receipt of payment.
(b) MOU (Memorandum of Understanding): Both buyer and seller may enter into Memorandum of Understanding. It is not a legal document and is generally mistaken as sale agreement. It is basically an agreement which expresses intent / desire / will of all the parties to mutually agreed upon common line of action i.e. to close property transaction in this case. It does not provide any legal rights but only captures the intent of all the parties. In short, it does not grant substantial rights till legal agreement is executed. It cannot be legally enforced in the court of law. Any party can back out from the same but it does not mean that token money paid under MOU is not safe. If seller back out then he has to refund the advance and penalty (if any). As the name suggest, its only an understanding between the parties. Though it is not legally binding but since in property transaction there is an exchange of money therefore MOU is binding on both the parties.
Besides token money, Memorandum of Understanding is useful if the final deal is subject to certain terms and conditions. For example, seller has bought another house but he will shift only after 6 months or buyer need time to arrange funds.
(c) Notarized Agreement / MOU: Though it is not necessary to Notarize MOU or agreement at the time of payment of token money but in my opinion it is advisable. Notary only certify that all parties have signed in front of him. It safeguard the interest of a buyer to avoid any legal dispute. In short, an MOU signed between the parties can be notarized to make it more secure and binding in true sense.
(d) Sale Agreement: A Sale Agreement is legally enforceable definitive legal document. It is legally binding on all the parties and grants substantial rights to the parties. If any party breaches the terms and conditions of the sale agreement then it is legally termed as Breach of Contract. In many cases, token money is paid at the time of execution of sale agreement. Based on same, buyer apply for Home Loan. Usually sale agreement is executed on stamp papers equivalent to 0.1% of Sale Agreement Value. In few cases i advised my clients to register the sale agreement similar to sale deed specially in case of risky transactions. Any stamp duty paid in registrar office to register sale agreement is adjusted at the time of execution of sale deed.
To summarize, my order of preference is Sale Agreement << Notarized Agreement << MOU (Memorandum of Understanding) << Payment Receipt
10 Imp Points to be included in Token Money Instrument
Depending on your requirement, you may select any of the above mentioned instrument/document to be executed at the time of Token Money payment. Irrespective of document type, it is imp to include following clauses to safeguard your interest as a buyer
(a) Details of Buyer and Seller: Include complete name, father’s name, current address and details of one of the govt issued id proof preferably PAN of both buyer and the seller
(b) Property Details: Mention complete property details
(c) Payment Details: Mention mutually agreed upon consideration value and when it will be due from buyer to seller. For example, 2 lakh paid as a token money, 10 lakh due at the time of sale agreement and balance 68 lakh to be paid at the time of sale deed.
(d) Time line / Validity: Assuming you are signing a MOU then kindly mention the validity of same. Also mention timeline for payment schedule and other terms & condition (if required) of MOU. In one of my clients case who is seller, the buyer is not registering the property even after 3 years of signing the sale agreement. Reason being there is no such timeline in sale agreement to close the deal.
(e) Mention Sale Agreement / Sale Deed to be executed later: If you are issuing payment receipt or executing MOU, do mention that at present you are only paying a token money. An agreement will be signed later and do mention the timeline for execution of sale agreement / sale deed as i mentioned in previous point.
(f) Termination clause: Very critical clause specially in MOU. A buyer should mention and specify conditions under which agreement can be terminated and corresponding refund clause. Also if the agreement is terminated by seller then what will be monetary penalty and vice versa. In case of legal defect in property or home loan is rejected on similar ground, seller will refund the token money to buyer.
(g) Seller cannot Sell property till MOU / Agreement is in place: The probability of fraud is high when seller accept token money from part A and sell property to party B. This clause is imp specially if you are signing MOU as it is not legally enforceable. You should mention a clause that seller cannot sell property till MOU is in force.
(h) Death of a Buyer / Seller: If god forbids and something happen to buyer or seller before closure of property deal. In this case, legal heirs of buyer and seller should have same rights as that of a buyer or seller. Either token money will be refunded or deal will be closed by legal heirs. This clause is imp if time gap between signing of MOU and sale deed is more than 1 month.
(i) Witnesses: It is critical to get signature of atleast 2 witnesses on Payment Receipt / MOU. In many cases, a buyer and seller sign agreement mutually without any witnesses. In case of dispute, it is difficult to prove the authenticity of the MOU.
(j) Cash Component: Last but not the least, the Token Money should never be paid in CASH as its a crime. It is suicidal even if the seller is known person. I never suggest or recommend any cash dealing in property transaction.
Ideal Token Money Amount
Million dollar question and there is no correct answer to this question. Its a catch 22 situation for me while answering this question. I always link Token Money to the risk involved in property transaction. Higher the Risk, Lower the Token Money and vice versa. The risk component vary from client to client and there is no mathematical formula to calculate the same. In this post, if we assume that only risk is the nature of document/instrument being signed for token money then in my opinion ideal token money amount is as follows
(a) Payment Receipt: Rs 50000 – Rs 100,000 or 2% of Property value, Whichever is lower
(b) MOU: Upto Rs 200000 or 2% of Property Value, Whichever is lower
(c) Notarized Agreement: Upto Rs 300000 or 4% of Property Value, Whichever is lower
(c) Sale Agreement: Upto Rs 1000000 or 10% of Property Value, Whichever is lower
Again it is very subjective and vary from case to case basis. There is no hard and fast rule regarding the same and depend on mutual understanding between the buyer and the seller. The above figs are indicative and based on my experience.
Hope you liked this post…
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Hello sir,
We are selling our property for 77,50,000. Buyer. Has decided to go with sale agreement which says 100000 advance n after 15 days they would pay 30,00000 n original document or possession has to be given. The agreement doesnot say about the rest of the 46,00000.
Need a advice on this. Please let us know is it safe to submit our original document. We have not signed the agreement yet. How do we go about this?
Original documents should be handed over only at the time of receipt of full and final settlement i.e. upon receipt of complete amount. I am not sure why you have not included details of balance 46 lakh payment in sale agreement.
Sir we have not signed for the agreement yet. Rate has been finalised. How should the sale agreement look like.. We verified the agreement with the known lawyer and he told not to submit the document.
As per buyer once they pay 50% of the amount either we need to shift or submit the documents and he needs an agreement for the processing of home loan.
What kind of an agreement bank needs?
You may check with the local lawyer on sale agreement. For home loan processing, bank of buyer hold 10% of payment till original documents are submitted therefore not necessary to handover original documents before registration.
Hi Sir,
How about paying the sale agreement advance and final sale deed amount though NEFT or RTGS (net banking) mode. Can we quote the transaction IDs as reference in the agreements?
You can pay but personally i will not suggest.
Hello Nitin,
Thanks a lot for the detailed information for home loan and property related queries. This is very helpful specially people like me who are first time buyers.
I bought a flat in wakad, pune and now applying for a home loan. The owner of the flat has a loan from HDFC. Is it ok if I also opt loan from HDFC so that processing can be fast and bank will not ask much document as they already has because propert is already mortage with them. Please advice. Thanks!
-Mayank
I will prefer some other bank like SBI or ICICI bank. You should not be afraid of documentation. The more documents bank ask better it is for you.
Hello Sir,
I recently booked flat in Pune with token amount 10 Lacs however after verified file with Lawyer I have found below lo-false in it. Now I want to buy-out from this deal. Could you please read below issue and let me know how can I buy-out from this deal and request builder to give my token amount back.
Required documents:
Documents
required:
1. Most of
the documents not provided in Master File which are ticked on Index page list.
2. 7/12
reports updated copies should be provided and all those must be separated and
not attached in Search Reports.
3. Survey no:
x/y, Mr. Kate has 5 varas in ferfar
document and on Kharedikhat its showing only 3 names so His wife Mrs. Kate and
his son Mr. Kate both names Need to be corrected on 7/12. This is very serious
issue they might be claim in future. This survey no does not have NA order.
4. Survey no:
x/y – Dasta. NO x/2014/ – It’s not showing owners name as x.y.z on document
(Kharedi khat) – in avibhakta hissa area
not mentioned clearly, area needs to specific on kharedi khat also on Index
copy its showing 0 R, How it can be possible zero. Because of this serious
issue stamp duty calculation might be incorrect in future. And stamp duty given
only 4300 for this dasta. It’s also questionable.
5. Survey no:
x/y – Dasta NO- 2xx9 – in avibhakta
hissa area not mentioned clearly and on index its showing 13R and stamp duty
paid is 34000 Rs, There was 1 month difference in above both dastas and land
area is not visible correctly.
6. One
confirmation deed includes 3 different dasta’s as per the standard process; in
one confirmation deed should not include 3 different dasta, Separate
confirmation deed required for all dasta.
a) Dasta 1-
All names not displayed correctly. b) Dasta 2- land owner is not mentioned
correctly somewhere its showing Mr. x. y. z(Builder name) n somewhere its
showing a.b.c. (construction company name) (For all documents correction deed
required related to naming issue, Uniformity should be there between abc n xyz names)
7. Survey no:
a/b – Mrs.: x y z name should be displayed In Etar Hakka.
8. Survey no:
a/b – Search Report is not attached in file.
9. Survey no:
c/d and e/f: Lawyer’s Title report is
not showing land accurately. (Arithmetical calculation’s mismatched), land acquired
by corporation is not showing correctly.
Eg:
calculations: 1362+1362 —7/12 required:
Actual land is 20R + 20 R = 1 Acre
10. Survey
no: c/d and e/f shows land owner name as x y z names on 7/12,
12. Sample
Draft agreement should be corrected as per the latest land owner names and possession
date promised at the time of booking which is Jan 16.
13. Survey
no: c/d and e/f — Documents Not showing
a residential zone? Amalgamation plan not attached in file. Missing zone
certificate which will show residential plot for both the survey nos.
14: Survey
no: c/d and e/f — NA order not given (area is huge which around 1 acre and who
will show that area is not in our approved plan) .Its showing only land
acquired, land acquired and road winding, road winding. Need to clear all area
on documents.
15. Layout plan need to correct along with
architect true copy and should provide same before agreement.
16. Corrected
Blue print required.
I have emailed these documents to builder and ask him to provide then I can do agreement however its telling He has everything legal. He requested me to sit my lawyer in front of him to debat … this project has HDFC bank approval also got laon from all banks like, LIC, SBI, ICICI, HDFC, AXIS… I am very confuse not how can this project is approved from PCMC and how can purchase got loan from nationalized bank even though that project doesn’t have NA order and amalgamation plan.
Please help me in this. First I want my money back later on I can take action against all guilty people.
THanks,
Nilesh
Personalized consultation is available on paid basis.
Hello Sir,
i want to buy a plot of from my friend who is not a builder. He has been owning that plot for 10 years .. But the plot is not T&CP approved. Actually the whole colony in which the plot situated is not approved by T&CP but it is diverted. ..should i buy this one?? or before buying is it possible to get the plot approved from T&CP??
I will not suggest to go ahead.
Hello Nitin Sir,
First of all i would like to thank you for your wonderful blog. Now coming to my issue, 1.5 months back i booked a flat at Noida extension with a reputed builder with a booking amount of 3.1 lakhs in subvention scheme(10:80:10). i am only having an booking acknowledgement receipt and no further documentation(agreement) has happened. Due to some personal financial crisis i don’t want to continue further in this deal and want to get refund my booking amount. But the builder has denied to refund as the application form signed by me is having a clause “if for any reason the booking of the apartment/flat is cancelled by the applicant, then the entire Amount of Earnest Money/Registration Amount(10%) of the apartment/flat would be forfeited and the balance amount will be refunded without any interest.”
By any chance can i get back my booking amount. please suggest.
I doubt.
Hi Nitin,
I have read through your articles, really it is of great help.
I am planning on purchasing a flat, I have read that during Agreement of Sale, the payment to be made is 10% of property value. But the builder is asking for 25% saying that it is the minimum that is acceptable by the bank to go forward with the Loan sanction process.
Is it true? Or can we still pay only 10% and the bank will process our loan application without any issues.
Best,
Arghya
I disagree with builder. You should not pay more than 10%. It has nothing to do with home loan process.
Hi sir, we are planning to purchase a land and are about to do the registration, the seller has asked us to give the final payment(land value as per government rates) through RTGS in his account. I wanted to confirm if RTGS is a valid method of payment or should we give a cheque of same date as it the general norm?
You can pay through RTGS but record the payment details in your agreement/sale deed.
hello nitin,
iam in a process of buying a resale property in gurgaon, the person from whom iam buying it is secon owner, he claims to have original sale deed from first owner as wel as conveyance deed, but says that he does not have neither buider buyer agreement , neither agreement between first owner and him. he claims to ave only xerox of builder buyer agreement.
please clarify importance of builder buyer agreement , is it necesary doc for future , or wat?
he says it does not have any value as it is null and void after registry?
please reply
Hi , I have flat on my name. My wife looked for a buyer. I had not given my consent. The Agent brought the buyer. who gave the token 2% of the sale value. She asked to deposit the cheque without my consent again as I was not ready to sell the flat. After credit of cheque She cancelled the deal asking to take back the token money by next day as she was convinced on the reason for not selling the flat. this all heppend in week time from buyer comming to see the flat till cancellation of deal. Now the buyer is not accepting the refund back and claiming for double money. Claims they want additional they beared as they sold jwellery and stuff. Thretens on registering fraud case. Pls suggest how to handle this.
Just to Add there was nothing signed. or no payment receipt was given of signed. It was all verbal.
Without any written document or agreement, a buyer cannot do much. You may send the DD/Bankers cheque in the name of a buyer at his address through speed post and keep copy of same. Maintain a stand that buyer forced you to go for the deal without written agreement and you are now willing to return the money.
Hi , Just wanted to know when token money is paid for the property before agreement to sell and for any reason buyer is unable to go ahead with the deal will that money is suppose to be refunded by the owner.
It depends but normally token money is forfeited.
Mr Bhatia , thanks for your reply.
Hi Nitin,
I entered into an MOU and paid token of 1% of sale value, which was deposited in bank by seller.
Now the seller is backing out and giving number of reasons for not selling.
Do I have legal right, as I have already invested time, efforts and also arranged funds.
It depends on terms and conditions of the agreement. If there is NO specific termination/penalty clause then seller can back out after refunding token money. Moreover as i mention in my this post that MOU is legally non-binding. In my opinion, your case is weak.
I wanted a little clarification if you could please help me here. Okay so we wanted to get our house rebuilt under the builder collaboration system. The builder paid us an amount of 50000 which included partly cash payment and partly by cheque. This was done via the payment receipt. I would like to mention that it had the signature of the first owner but not of the second owner or any other witness. Now due to some personal disputes we turned down the deal. Please acknowledge that there was no agreement or anything else signed. Just this token money receipt. We do not have the copy of this receipt and now the builder is not letting us back out of the deal saying that he will file a cheating case on us and we should pay him a very large compensation in order to get away. I would like to know the consequences and what should we do.
Thank you
Builder is only threatening you. As there is no written agreement or MOU therefore builder cannot do anything. You can refund the token amount along with penal interest of 18%. Normally, the rule is to return double the token amount if the deal does not go through. If he insist you may return Rs 1 lac. Also to add that cash component of more than Rs 20,000 as a token amount is illegal.
Thanks for your reply Mr Bhatia. Just one more thing, the builder is not ready to take it at an interest rate or even double the money. Then how to give it. Should we do this legally?
You can deposit Principal amount in builders bank account. After that send him a mail and also a letter through registered post on his official address mentioning that you have refunded principal amount along with complete payment details. Also mention that as per current practice, You are willing to pay either 18% interest or equivalent amount as penalty towards refund of token amount. Therefore, builder can inform you regarding the same within 30 days from date of receipt of email or registered letter. If you will not receive any communication regarding penalty then issue is closed from your end.
Hii sir,I paid a token amount of 5 lacs to a broken to buy a property in navi mumbai but unfortunately my home loan doesnt got approved to the extent of the amount i was looking for & now i ask this broker to give my money back,I made the payment by cheq & no receipt was issued to me,Also I didnt signed anywhere, now since we issues the cross chq on builders name & the flat was allotted on my name so do i need to ask for refund from broker or from builder??
Also my 2nd question is that what options do I have if the broker/Builder refuses to refund & forcing me to buy some property through him only?
Regards
As i understand the home loan approved amount is lower than your requirement. It is not because of any defect in the title of the property.
To claim refund, first you need to check the policy of builder in this regard. Normally they deduct 20% of booking amount or fixed amount say 1 lac & refund the balance amount to buyer. As you were dealing through broker therefore you explain your situation to broker and request his help for refund as per builder’s policy
I will answer 2nd question based on response of builder/broker to first answer.
Thank you very much sir.Will update you shortly regarding their response.
Hi Sir,
I have booked a flat for 37 lacs by paying one lac as booking amount..later transferred 7 lacs to cover 20 % of flat cost…Sale agreement was done…Got home loan approved for 29 lacs..Now for some reasons I want to cancel the flat…
When I checked the Sale Agreement..There is a clause stating that If i want to cancel they will deduct 10% of advance amount and refund the rest. (THis is on a stamp paper)… When I contacted the builder for the same they say that 10% of flat cost will be deducted as this is the same listed under terms & conditions of booking form that I have filled while booking the flat.
Kindly let me know which one (Sale agreement or booking form) is valid legally. I want to cancel this flat at any cost as I would be moving out of state and will no longer stay there..Kindly suggest.
You have not mentioned which document you signed first i.e. agreement or booking form.
It is the Booking Form I have signed by paying 1 lakh…Later after paying 20 % I signed the Sale Agreement.
Terms and conditions in Sale Agreement will supersede booking form.
Hi Nitin,
This really a nice post and keep it up.
Coming to my confusion. I am buying a resale flat in pune. Owner is asking for 5L(around 12% of basic cost) as a token amount. I am not sure that how to process. I have ask my advocate for MoU and at the time of MoU my advocate will verify all documents. So, in this case should i agree with 5L token amount or pay only 2% of basic cost as a token amount?
and what is next step for this process and when I can pay remaining 20% amount ?
Please guide as I am confuse in this.
I have explained it in my post. At max you can settle for 2L token money. The 20% should be paid at the time of sale agreement or MOU. Instead of MOU, you may opt for sale agreement as the MOU is legally non-binding in nature.
Thank you Nitin for quick response,
Now what if deal is not closed in certain period, lets say 70 days. Is there any standard clause for this ?
What would be the clause in M.O.U, if deal is not closed in particular days ?
I am very much confuse about it because owner is asking for 1L penalty in this case and which is not valid from the buyer point of view.
You have cover the various scenarios and applicable penalty/refund clause.
Dear Sir,
I am selling my flat at Kalyan, (I am first owner with no loan) via broker to buyer. Party is in need taking bank loan of 35 lakh & will pay 30% amount from his own contribution.
I intend by execute SALE DEED post receiving entire consideration amount (buyer’s contribution + loan disbursement), kindly guide how to do we ensure safe proceeding
1. Am I mandate do proper registration of MoU with party with detailing payment schedule & respective terms, condition and time limit?
2. Do you suggest, after MoU is registered and receiving buyer’s contribution amount, get in AGREEMENT OF SALE, so buyer can submit case to bank for technical verification & disbursement approvals. To my information agreement of sale will be valid to go to next level of SALE DEED only if all payment & other terms and conditions get fulfilled.
3. In case of resale, does banks in Mumbai – Kalyan area, does disbursement of loan amount after agreement of sale gets signed. I guess they do it in case of direct purchase from builder but i am not sure about resale case.
4. So to my understanding workflow will be like this MOU get entire amount of buyer contribution - AGREEMENT OF SALE Bank approval and loan disbursement on seller’s name - SALE DEED
If this is not correct understanding or process not followed in Mumbai area, kindly guide how this transaction needs to proceed ensuring as a seller, I get full consideration amount before singing off / handover of agreement / sale deed to party.
To answer these queries, i need to go through complete details. At macro level, i will prefer sale agreement compared to MOU.
Hi.
Friends of mine decided to sell a piece of land and received token money from the buyer. A few months later the buyer came back and said he can’t buy the land due to financial reasons and wants a refund of the amount. Is this legal?
It depends whether any agreement is signed or not & agreed terms and conditions between 2 parties. Normally, token money is forfeited if the buyer backs out from the deal.
Hi Nitinji,
What if after all these precautions the builder or the seller is not returning the token money what a buyer should do. as I have applied for Raheja’s Krishna Affordable Housing Scheme and surrendered the flat last July. There was a clause that builder will refund the money in 15 days or else will pay 10%interest. But since then he is dili-dallying the matter. Since my last meeting with them they hv assured me that they will give me the cheque till 15th march and this time if they not, what course of action can I take against them. should i approach a consumer court or a civil court for recovery of my money which after mandatory deduction of 25k comes around 90k.
thanks nidhi
I will not suggest civil court as matter may drag for years. You can approach consumer forum and claim compensation. No need to hire a lawyer, you can fight your own case. The decision will be delivered within 3 months.
thank u Nitinji
Hi NitinJi,
I had a deal with the buyer for sale of my flat some 9 months back and he paid me a token of Rs.2 lacs via cheque. The MOU was signed only by me and only one witness and not by the buyer. There after after 1 month the buyer said that he don’t want to buy the flat since few papers are not as per the requirement of bank and due to which he was not getting loan. I had also given the token of Rs. 2 lacs for purchase of new flat for me and since the buyer refused to buy my flat I forcefully had to cancel my deal. My seller told me that he will not give me the token money back. Then also out of courtesy I had returned 1 lac to my buyer and said that you will not get remaining 1 lac for which he agreed at that time.
Now after 9 months the buyer of my flat has sent a letter from Advocate giving some false facts and asking for refund of remaining 1 lacs from me and also threatened me to file a criminal case against me.
I don’t have money to refund back the token since my seller is not willing to return my token money to me..
Please suggest how to go ahead with this notice and also let me know whether he can further file any case on me.
Regards,
Vaibhav V
As MOU is not signed by the buyer therefore there is no way to prove any of the facts shared by you. I think he did that intentionally to keep the deal open. In my opinion, you should return balance 1L.
Thanks NitinJi,
But I had already given token further for purchase of new flat for myself and now the my seller is not giving me the token money back by saying that you cancelled the deal. And now as suggested by you, if I have to pay remaining 1 lac to my buyer than I will be in loss..And in my case it is my buyer who cancelled the deal..
Please suggest how to reply him back without loosing 1 lac from my own pocket.
Regards,
Vaibhav V
As i have not seen the documents therefore cannot comment. I suggest you to check with the lawyer.
Hi, Myself have booked land of 1000sq ft in Roha. And have paid 51000/- (total cost 6lacks). I have to pay 2lacks in next month & balance monthwise for next 2 years. Company going to give me notarized MOU after paying 2lacks. Is notarized MOU considered legally. Please guide.
It is legally non binding.
we had paid Rs 8 lacs (4 lacs cash and 4 lacs by chq) as token money of 78 lacs flat n executed a sale agreement on 28.11.2015 with time period of 90 days, we had not seen the original title deeds as the seller said it was somewhere else and he will get title deeds by 5.12.2015 , but till date seller had not shown us the original title deeds and giving us excuses that those deeds are with bank as security and asking us for some more time.
what should we do now as as per agreement the seller has to pay double the amount of token amount if he fails the terms of agreement.
Shall we file a FIR under section 420 since he had enter in unlawful contract and fraud (Flat is mortgaged with some bank and he hide this from us)..
Please Guide.
In my opinion, You should hire a lawyer and first send a legal notice and seek refund of token money along with equivalent amount as penalty as per the sale agreement. Wait for his response before taking any police action.
Hello Nitin Sir,
We are planning to buy a plot for 35lac. The owner has taken loan for the plot about 15Lac. He is asking us to clear the loan amount and we agreed to do it by giving DD to the bank.After this he wants us to give him 12 lac cash before registration. He is asking us to make sale agreement in 3400 rs stamp paper in front of Notary.Is it safe to give him 12 lac money? If anything happens in future can we file a case against him in court?
I will not suggest a cash transaction. You can directly go for a registration.
Since he has taken loan all documents are in bank so we have to give did to the bank to discharge the paper.. So we can’t do direct registration…
You may ask for home loan closure letter from bank along with original documents with home loan bank. You can clear his home loan directly rather paying him. The entire process will be completed on date of registration.
we did like that only… property got registered… thank you sir.
Hello sir , I want to purchase 1/2 port of plot but in registry there is mention no sub partition allow . Can I purchase this plot.
No. First the seller need to execute partition deed and then he can sell.
Dear sir,
I have buy a house from seller through property Delar. I have pay 1 lakh as a token money. Whole deal written on simple paper and both signed on it. After 5 days later I cancelled the Deal. But sealer not returning token money. Please guide me…..
Gopal Bansal
As an unwritten rule, if buyer backs out from the deal then the token money is forfeited by the seller until unless you specifically mentioned in the signed paper.
Dear Sir,
I booked plot for Rs 19.11 lakhs, and paid an advance of Rs 4 lakh vide cheque and collected receipt also and balance amount will get release by bank loan. And also made Sale agreement for a period of two months. But due to legal issues in the property Bank is holded my cheque for disbursement. Then i came to know that Joint development agreement is not registered it is only notarized.But developer is a Registered GPA Holder. Then i asked the developer documents is not legally correct so please refund my advance amount. Now developer is not responding correctly about my refund of advance. In this scenario what can i do suggest me?
Please send legal notice and initiate legal action.
In addition developer is arguing with me, property documents is perfect and do the registration but i checked with few lawyers they are telling legally it is not perfect. The problems in legal is:-
1) Joint Development agreement is not registered (No Area sharing details because he paid full money to Land owners) If he paid full money to Land owners why developer not executed the sale deed legally.
2) Full paid agreement of sale is notarized between land owners and developer.
After knowing legal problem the bank is now ready to issue a holded cheque based on the recommendation by bank area manager. The recommendation by Bank manager
1) Based on fully paid agreement between land owner and developer we can issue a cheque to the purchaser.
If this is valid shall i get register or shall a suit case against developer for refund of my advance amount.
It is must to register JDA else there is a possibility of disputes/claims in future. Bank is not responsible for the title of the property and in case of any dispute only the borrower is in legal and financial trouble. In my opinion, either you should exit the project or tell the builder to register the JDA.
Dear Sir,
I have given token money of 1lakh cheque to NRI seller . We have paid for stamp duty and registration charges On the day of registration but seller has asked us do the RTGS transaction of total vale and he was 40 KM away from registrar office, he told that he will check the amount in his account through his internet connection only and will be move out for registration only on exact time.
So we doubt on his intentions as we asked him to come to bank where we will do the RTGS so that immediately he can verify and process for registration which he refused.
Also he was stick to the same date of registration and he sent on mail that he will not do the registration under any circumstances if the said date will be passed.
Since he refused to move out from his place without checking RTGS , we had to cancel the challan which we paid for stamp duty and registration.
We lost the trust on him and suspect on his intentions as he was changing so many thing at the last moment.
We have then sent him mail to refund the token money as he did not come to bank for RTGS and registration office .
Now he asked to have a deal after 4 days for which he never agreed . since there is no trust so we cannot believe and go with the deal.
In the MOU there is a condition for giving the penalty and refund the money if deal canceled by seller and if buyer cancel the deal then token forfeit.
He is not accepting on mail for cancelling the deal by him and on every mail he is asking us to say we are cancelling the deal.
How to take refund of token money. Token money given to him through my account but the buyer name is of my wife .
Being a NRI is it possible to take token money back.
File a police case of cheating and fraud. He will be on track and refund the token money. His mobile records will prove that he was at his home on agreed date of registration.
Dear sir,
I have booked flat with token amount Rs. 50,000/- for flat value Rs. 40,00,000/- mutually agreed between seller & me . But due to some problem within a 4 days from a deal i decide to cancel the deal by stopping cheque payment. Due to this, Buyer could not receive token amount. In this matter, seller demanding penalty of Rs 20,000. Also, legal formalities not done between us. Whether penalty is applicable , if yes how much it would be?
No. There is no penalty as there is no legal/written understanding
We bought a property 1.5 year back and its is registred on my fathers name and my father is completly illerate….as i m working abroad my father decided to sell that property and he took a token money for the same and signed an MOU with the agent and buyer….(my father dont know to read and write) my father informed me after signing the mou… but know that we dicusssed and now we hav decided not to sell the property
So sir my question Is as seller now can we break this MOU? with we r ready to pay back the token money how much penatly we hav to pay
Sell consideration 32lakh
Token money 51000
Please guid
It depends on terms and conditions of MOU. Normally, the seller has to to return double the token money.
Dear sir,
I have taken a token amount Rs. 50,000/- for my flat
value Rs. 140,00,000/- mutually agreed between buyer & me on a plain paper . But due
to some problem in deal i decide to cancel the deal . Due to this, Buyer is threatening for court case .i am ready to return the token money but still they r threatening for court case. Sir Please Guide what should we do.
You have to honor the agreement even if it is on plain paper.
Hello Nitin Ji,
Ive taken a token for sale of my flat.
As per mou, there are two dates. 1st date when we receive 25% payment and go for registration and second date when we get the full and final payment and give possession of the flat.
If for any reason the first date is missed what happens to the fate of the deal ?
And about the token money, is it to be refunded or forfeited by the buyer
The token amount can be forfeited by the seller if the buyer fail to pay the amount as per agreed upon terms.
Hello Nitin sir,
I am going to buy a resale flat from 2nd owner in navi-mumbai which is 12 yrs old CIDCO property. Deal is final and All documents are available except one payment receipt which is paid by first owner to CIDCO. is it create any problems or how to solve this issues ? Still MOU is pending. Can I do Sale Agreement directly instead of MOU ? Could you please let me know your suggestions ?
You can get a copy of payment receipt from CIDCO office. If you are not sure of title of the property then execute MOU else directly register sale agreement.
Thank you Nitin Sir. I have informed the 2nd owner to get it from
CIDCO. Property title is clear. ASAP 2 owner will get the receipt, I
will go for sale agreement.
Hello Sir,
I am selling my property @ 40 lakhs. Purchaser has provided me a sanction letter (L & T Finance) of all 40 lakhs & told me I will pay you 16 lakhs DD at the time of registration in the name of SBI to close your loan.
Remaining 24 lakhs DD by the name of myself will be given once u handover the originals from SBI to him. Same day we will do the sale deed execution.
Now I am bit confused here since:
1.) How it is possible all 100% finance given. As per my understanding 20% needs to be paid by the purchaser.
2.) How I’ll come to know remaining DD on my name is if 24 lakhs not lesser than that.
Is it safe to have this deal?
Kindly respond asap.
Thanks
PrashantM
1. Your understanding is correct. It seems the buyer is mistaken. He must have pre sanctioned home loan and he is assuming he will be get 100% disbursement. You can discuss with him and insist 20% payment from his own sources.
2. You can ask for photocopy of DD before registration. Also you should mention all these details in your sale deed.
Hello Sir,
Thnx a lot for u r help.
Thnx
Hello Sir
I am a NRI planning to buy property in Mumbai.. I have selected the flat and now have to go for token money. I wanted to know what document verification can I do before paying the token money? It’s 30 lac flat n token money asked is about 1 lac.. bank has verified the eligibility but still if loan doesn’t get sanction then will I get back the token amount.. I just want to know what procedures n document verification can I do before paying token money
You can include a clause that in case loan is rejected on grounds of legal verification then the token money will be refunded. You can check all the originals and ask copy of same for verification. For generic list of documents, you can check my following post
https://www.nitinbhatia.in/real-estate/property-document/
Thank you for your reply, Sir
I am going to purchase a flat at Navi Mumbai from an individual on resale. The Seller had purchased flat from the builder.
I have already made part payment to the Seller.
Now the seller has informed that he will not hand over the original / copy of receipts of payment irrespective of whether it is legal requirement or required by bank for availing home loan by the purchaser. His view is that since he has made the payment for which he want to retain the receipts & need not hand over as part of documentation required for sale of the flat by him
I would like to know the reason for asking the seller to hand over the original payment receipts obtained by him from the builder / original seller.
I think he has lost the same. Otherwise It is quite ridiculous demand. If you are buying the property then all the originals should be handed over to you as the seller will not have any rights in the property after registration. He can always retain photocopy of same for his records.
Thank you Nitin, your post is very useful. I am buying resale flat on which owner is having loan. Can I prepare the DD directly on Bank name (DHFL) so that loan can be repaid or is it required to have DD on owner name ? What if owner doesn’t repay the loan and use fund for other purpose. Appreciate your prompt reply.
Please check following post
https://www.nitinbhatia.in/home-loan/close-home-loan/
Sir, I paid Token money of Rs 50000 by check for the flat and had receipt of payment on photocopy of cheque with seller’s signature and stamp. on the receipt it was clearly mentioned that “Received sum of Rs 50000 by cheque for the flat no. ………. and This deal is subject to loan approval.” Now, then I applied for home loan that was done by bank and then Bank said that we will give you this loan on any property but not on the Flat you are looking for, because that property is BLACKLISTED. Now seller is not giving back the refund and forcing me to go to another bank for Home Loan.
Now please suggest me what to do?
You may take legal route. Before that you need to check the reason for blacklisting the property.
Is such an acknowledgement on photocopy of cheque with sign and signature of builder, legally enforceable?
No
sir
a friend of mine took me in a car arranged by developer of well known property developer to show me a plot of measuring 30x45ft corner plot in suburban bangalore. All that he said that layout formed out of 2 acres falling under bangalore sarjapur road which has immense potential for future growth and return on investment. on my visiting the plot nearer to evening i was taken to bagalur near Hosur and the developed plot was shown. The catalogue/leaflet printed for this plot was also mentioning Bangalore sarjapur road within jurisdiction of bangalore. However, on personal visit, the jurisdicton falls under Hosur (from sarjapur end to the plot is around 12 Kms)
and registration happens in Hosur. Also there was no DTCP approval and he has assured village panchayath has approval Since it was mentioned as inaugural offer and i need to confirm by paying advance of Rs 50K same evening to block the plot, Reluctantly, though i was not interested in the plot, because of my friend i paid by cheque the amount of 50K, with an assurance that if my loan through bank does not come through, the advance amount will be refuned. However, the bank upon my submitting documents was reluctant to offer the loan due to my age restriction (58 years) and property falling in Hosur (other than limit of Bangalore for the bank). The developer issued a receipt for the same without any other applications or documents signed by me and confirming allotment of said corner plot. However, due to paucity of funds, i asked my friend to return the advance amount through the developer after two months of time.
Now my friend says that the developer will deduct rs 10000 and would refund balance amount after two months time. I have not signed any application with the developer and they have not issued any letter to the effect of allotting me the site. Only receipt is issued as advance for site (without mentioning site number and location of the site).
Kindly advise how would I claim back full money 50K from the developer. Is developer right in deducting 10K amount? Rgds
Nothing much can be done in this case. You can accept refund of 40k. It is a common practice to cheat senior citizens. It seems your friend is some sort of a agent of developer.
Sir, I live in Bangalore and want to sell my late father’s flat in Kolkata. Is it legal to accept the token money from the buyer through NEFT against a MoU? Is it wrong to share my bank account details in this initial stage?
Nothing wrong in sharing bank account details. You may accept payment through NEFT and record the same in MOU.
Thank you Sir
Sir,
I am buying a resale flat due for possession, how can I confirm that the due amount which seller is telling is the actual amount as the builder is not ready to disclose the amount due?
He has to produce a letter from builder with balance outstanding else there is no way to find out.
Thank U Sir
Dear sir, my father and his 04 other siblings are selling an ancestral property in Defence colony, New delhi, for 20 crores. This house belonged to my late grandfather, and was disputed in court for almost 25 years. Now, the court case has closed, and all 5 brothers and sisters (my father included) are getting their equal share in the property. The buyer of this property has given an advance payment of rs. 99 lacs to each of these 5 people through Bank DD. This was sometime in early May 2016. Since my father also got his share of 99 lacs as initial amount, he decided to buy me a property in Noida, costing Rs. 95 lacs. In May end 2016, we paid an advance payment of 8 lacs to the Noida owner. We were expecting the defence colony buyer to close the deal before it was time for our noida deal to get closed. But, since there are many complications in the defence colony property (leasehold to freehold, multiple owners, non-avaialability of one or more owners at the same time, etc etc), the defence colony deal will take another 2 months to materialize. In the meantime, it is now time for us to pay the entire remaining amount for the noida deal. Though we do have white money to pay, we do not have the amount that is to be paid to the noida owner in Black. Moreover, someone told us that, if the defence colony deal falls through for some reason (God forbid), we will have to return the initial amount of Rs. 99 lacs (that we received in early May 2016) back to the buyer of the defence colony house. Is this correct? Then what is the use of advance payment? If we have to return the money of 99 lacs, then we have no money to pay the noida owner also, because the noida deal was done in anticipation of the defence colony deal. Pls, confirm if we have to return the earnest money of 99 lacs, or is it wrong information? Thank you very much. Warm regards.
The refund of token money depends on the terms and conditions of the agreement signed by the buyer and sellers for defence colony property.
Dear Sir, I signed an agreement on stamp of Rs 100 for selling of flat with buyer. Buyer party was supposed to complete the transaction within three months. No clause of penalty or likewise was mentioned in this agreement, Its not notarized. Due to some consequences, I decided not to sell the property to buyer and I returned the full money to buyer after four months. Now I want to know if this would lead any legal implications?
I don’t think so. Still you can sign a cancellation agreement with the buyer.
Thanks a lot sir!
I have an flat in Mumbai ,few months back I have finalized the deal with buyer and handed over zerox copy of property but we have not signed any document yet. On this meeting he gave me one thousand rupees. After few days buyer called me and said bank is not giving loan so I am not interested on your property. So I changed my plan and sold my other property . Now that buyer send me letter throw adv and asking for complete the deal but now I don’t want to sell this flat. Since I have not signed any document yet how can I deal with this buyer. Please advise
As there was NO agreement signed therefore legally you are not bound to sell the property to this particular buyer. You may ignore his legal notice.
Hello Nitin,
We have finalised 1 commercial shop of amount approx 65 lakh, seller is asking for token of large amount for now, he wants to go with MOU for now and after 5-6 months builder will do sale agreement for the property.
Can we go ahead with MOU for now? If not, What will be the other options?
I will not suggest. MOU is legally non binding in India. You may pay 10% token money and execute time bound sale agreement. If the seller is not agreeing then you may find out some other property.
I have finalised a flat in nagpur maharashtra.
I want to apply for home loan as well.
So, which type of agreement should i do at the time of giving token money to buyer.
You can execute sale agreement and register in sub registrar office.
I hv entered mou with a buyer wrt my flat.
However both of us have not mentioned any clause pertaining to terms of termination of mou.
Can I still cancel the mou ?
I don’t think so.
Hi Nitin,
I am planning to buy the house from the developer without broker.The house is build on GPA land.
I have no problem in that.But my concern is how to give payments to him as i am planning it for the first time.
Also advice me whom to hire for the deal or i can alone do it.
You may hire local property lawyer. Secondly, GPA land is bit risky.
Hi sir, how to pay token money while being outside of india, both the buyer and seller.
Can i do a cheque payment to his a/c in india.
You may transfer token money through NEFT/RTGS or through Cheque/DD/Banker’s Cheque payment.
Dear sir,
I have paid Rs.50K as token via cheque. Now Seller is asking me to give him the cheque of Rs.24L to clear his existing loan and then he will handover me the original doc after 15 days for my loan processing in other bank.
Now how can i be secure in this transaction? Lets imagine seller intentions got changed once i submit him the cheque of Rs.24L.
In this case how i can make myself secure?
Please guide
Thanks in advance
I will not suggest. You may check my following post to clear home loan of a seller
https://www.nitinbhatia.in/home-loan/close-home-loan/