What is an Allotment Letter of Property?

March 23, 2024 in Knowledge Base

What is an Allotment Letter of Property?

The property allotment letter serves as a record of the sale and purchase of a housing unit or property. It affirms the allocation and outlines the terms and conditions of the transaction. Additionally, numerous lenders may request the allotment letter as evidence of ownership while proceeding with a home loan. This official document acts as proof that a particular property/housing unit is allotted to an individual. It is important for tax payment, home loan approval, and property registration.

The letter is issued at the time of construction and gives an overview of the size, location, sale information, completion date, payment options, and costs incurred at any time. It is provided by the developer to the home buyer so that the terms and conditions are clear. This letter of property allotment also specifies the developer’s liability in case there is a delay in construction.

The letter is issued once 15% of the payment is cleared by the purchaser.

One thing to remember is that the agreement once issued and signed, cannot be cancelled or diluted. Should the seller be unable to finish the construction or decide to terminate the contract, it is imperative to notify the buyer and issue a full refund.

As for the buyer, he can cancel the booking and, in that scenario, he will get a 100% refund from the seller.

Importance of a Property Allotment Letter

As a home buyer, a property allotment letter holds immense importance. Let’s understand the importance of a property allotment letter –

1. Protects the Buyer’s Interest:

An allotment letter of property specifies all the terms and conditions of purchase. It also acts as proof that the seller has paid a specific amount and mentions the pending balance. The letter assures the purchaser that the property will be constructed and ready to use by the specified date.

2. Purchase Confirmation:

The allotment letter confirms that the property is reserved for that buyer. It gives a surety that nobody else can claim it during that time. This is a legally binding contract and in case the developer doesn’t fulfil his end of the bargain, he can be held responsible.

3. Useful for Home Loans:

The letter of allotment has details regarding the payment due and proves to be useful while availing of a home loan. You can submit this document along with the sales agreement for a smoother process.

4. Tax Benefits:

The property allotment letter serves as a valuable tool for tax saving. In accordance with Section 54 of the Income Tax Act, individuals can avail of tax exemptions on the proceeds from selling residential property . By presenting the letter of allotment, taxpayers become eligible to claim a tax exemption on long-term capital gains as per Section 54F of the Act.

It is crucial for both the buyer and the developer or authority to have a clear and legally binding allotment letter to protect their respective interests and ensure a smooth property transfer process.

=>Read Also:- What is Real Estate Appraisal? Why Does it Matter?

Types of Property Allotment Letter

There are several types of property allotment letters in India. These depend on the property purchased and the terms and conditions associated with it.

  1. Flat Allotment: This letter is drafted during the property construction. It is necessary to obtain from the builder so that your flat cannot be sold to a third party. The letter provides all details regarding the schedules and associated costs.
  2. Quarter Allotment: The letter instructs the company’s director or administration department to allocate accommodation to the employees and staff members.
  3. Letter for Builders: Once the buyer has cleared the initial payment, the builder/developer issues this letter. It may also mention a clause for a refund, allowing the purchaser to revoke the contract.
  4. Car Parking Allocation: This is the letter when a parking space is allocated to an individual. You have to provide necessary details such as your name, address, contact information, vehicle type, and vehicle number.

Contents of a Property Allotment Letter

Make sure that the property allotment paper you receive has the requisite details for clarity and upholding. A typical letter compromises your name and address, type of property, allotment date, and payment terms & conditions. It should also include –

  1. Company developer name
  2. Authorised capital amount
  3. Registered office address
  4. Company developer’s registration number
  5. Bank and notary names to be mentioned
  6. Resale and transfer-related policies
  7. Penalty conditions for default

Tips for a Smooth Allotment Process

Buying a property and going through the allotment process can be a significant decision, and it is essential to ensure a smooth and hassle-free experience. Here are some valuable tips to help you navigate the allotment process successfully:

  1. Researching the Developer and Project:

    Conduct thorough research about the developer or real estate company offering the property. Look into their track record, reputation, and past projects to assess their reliability and credibility.

    Check for any complaints, legal issues, or delays associated with their previous projects. Reading online reviews and testimonials can also provide valuable insights.

  2. Understanding Local Real Estate Laws:

    Familiarise yourself with the real estate laws and regulations specific to the location where the property is situated. Different states may have their own set of rules governing property transactions.

    Be aware of the rights and protections granted to property buyers under the Real Estate (Regulation and Development) Act, 2016 (RERA) and other relevant laws.

  3. Maintaining Proper Communication with the Developer:

    Establish clear communication channels with the developer or their representatives. Ensure that you have a dedicated point of contact for any queries or concerns related to the allotment and subsequent processes.

    Seek written communication for important discussions or agreements to have a record of the interactions.

  4. Understanding Payment Terms and Schedules:

    Thoroughly understand the payment terms and schedules mentioned in the Allotment Letter. Be clear about the amount and mode of payments, including the booking amount and subsequent instalments.

    Keep track of payment due dates to avoid any penalties or complications.

    By following these tips, you can enhance your understanding of the allotment process and make informed decisions while buying a property in India. A smooth process lays the foundation for a successful and satisfactory property-buying experience.

  5. =>Read Also:- Possession Certificate Meaning, Benefits, Types & Know How to get Possession Certificate


    A property allotment paper is crucial for several purposes. It helps avail a home loan, maintain transparency, and get tax benefits. As a home buyer, it is important to review the terms and conditions specified in the document before signing it. Make sure you are only dealing with a reliable developer for smooth transactions and future security.

    Adani Realty is a trusted real estate developer with projects coming up in major cities. If you are searching for Flats in Mumbai get in touch with Adani Realty today.

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