Understanding the Allotment Letter in Property Transactions

When purchasing a property—especially in under-construction or newly launched projects—the allotment letter plays a pivotal role. This document, often issued by a developer or a government housing authority, acts as a formal acknowledgment of your chosen unit and lays down the initial terms of the agreement. While it doesn't grant full ownership, it’s your first step toward it—and a legally significant one at that.

What Is an Allotment Letter?

An allotment letter under RERA is a document issued by a builder or housing authority confirming that a particular unit in a project has been allocated to you. It includes:

• Unit details (number, size, floor)

• Price and payment terms

• Tentative possession date

• Project details and amenities promised
  
  

Key Legal Importance

Though it doesn't confer ownership, the allotment letter is:

• A legally binding document under RERA (Real Estate Regulatory Authority)

• Recognized by banks and NBFCs for home loan approvals

• Used to claim income tax benefits under Section 80C

However, final ownership is only conferred through a registered sale deed, which comes at a later stage.

Difference between Allotment Letter and Sale Deed

Understanding the difference between these documents is crucial:

Key Components of an Allotment Letter

When reviewing your allotment letter, make sure it includes:

🔹 Project and Unit Details

•      • Unit number, layout, carpet/built-up area

•      • Project name and location

•      • Developer or authority contact info

🔹 Pricing and Payment Schedule

•      • Total unit cost

•      • Payment milestones

•      • Late payment penalties

🔹 Possession Date

•      • Tentative handover timeline

•      • Conditions for delays or extensions

🔹 Builder Deliverables

•      • Parking space, club house, common areas

•      • Completion timeline for promised amenities

🔹 Legal Clauses

•      • Termination conditions

•      • Dispute resolution process (e.g., arbitration)

•      • Taxes, maintenance charges, other applicable fees

What is the Importance of an Allotment Letter?

✅ For Buyers:

•      • Serves as proof of allotment and helps in securing loans

•      • Aids in claiming tax deductions

•      • Acts as a legal document in case of disputes

✅ For Builders:

•      • Ensures buyer commitment

•      • Serves as a payment assurance

•      • Protects builder from defaults

Step-by-Step: How to get an Allotment Letter from Builder?

Here’s how the allotment letter process generally unfolds:

1. Application & Expression of Interest

   •      • Fill out a form and pay a nominal fee

   •      • Unit is reserved based on lottery, queue, or merit

2. Letter of Intent (Optional)

   •      • Some developers issue an LOI before the final allotment

   •      • May require an additional fee and has a validity period

3. Initial Agreement & Payment

   •      • Draft sale agreement is prepared

   •      • Initial payment is made post legal/financial review

4. Issuance of Allotment Letter

   •      • Confirms your unit officially

   •      • Details payment plan, price, possession date, etc.

5. Submission of Documents

   •      • Application receipts, ID proof, bank loan approval letter

   •      • Stamp duty or registration fees (if applicable)

Final Thoughts

While it might seem like just another document, the allotment letter is your legal foothold in the property acquisition journey. It formalizes your commitment, initiates your financial arrangements, and protects your interest in the unit. Always read the fine print, seek legal help if necessary, and ensure it complies with RERA provisions.