What is an Allotment Letter of Property? 

What is an Allotment Letter of Property?

An allotment letter documents the sale and purchase of a housing unit or home property. It confirms the allotment and specifies the terms and conditions under which the property has been sold. Many lenders also ask for the house allotment letter as proof when issuing a home loan.

The allotment letter serves as proof of the allocation of the housing unit to the allottee and is an important document that is required for various purposes, such as obtaining loans, registering the property, and paying taxes.

This article explains the concept of an allotment letter and its significance in the process of purchasing a property.

What is a property allotment letter ?

The allotment letter is issued for properties under construction and outlines the details of the sale, the property size and location, payment options, maintenance charges, the total amount due to the builder, and other costs that a buyer may pay to the seller. The developer or builder issues the letter to a buyer who has agreed to purchase a property from them.

Since the letter is issued when the house construction is yet to be complete, it also includes the construction schedule, completion date, and other similar information. Additionally, the letter mentions the builder’s liability if the construction is delayed.

One must note that the seller or builder cannot dilute or cancel the agreement as specified in the house allotment letter. However, if the seller cannot complete the construction or wishes to end the contract, they must send a notice to the buyer along with a complete refund.

The buyer can cancel their booking. In this case, the seller has to refund the total amount made by the buyer. Additionally, buyers can also seek a refund of the booked property along with interest if they have a valid letter of allotment.

Why is the property allotment letter important?

To understand the allotment letter’s meaning, one must understand its significance as explained below:

  • Ensures the safety of the buyer

    The letter of allotment is a crucial document as it outlines the terms and conditions of a sale. It serves as proof of the payment made to the seller or developer and the remaining balance that must be cleared. It assures buyers that the property in question will be completed by the promised date.

    Since the allotment letter of a property is a contract between the buyer and the seller, it is considered a legally binding agreement under Section 10 of the Indian Contract Act. Therefore, if the seller is not able to hold on to their part of the deal, buyers can hold them legally responsible for not delivering the house on time.

  • Useful in applying for a home loan

    The allotment letter, along with the sale agreement, is helpful for availing of a home loan. The letter contains details of the payment due to the builder and can help buyers get a home loan based on the agreement.

  • Used to claim a tax deduction

    The property allotment letter can be used for tax-saving purposes. Section 54 of the Income Tax Act 1961 offers tax exemptions on the sale of residential property. Taxpayers can use the letter of allotment to claim a tax exemption on long-term capital gains under Section 54F of the Act.

Types of allotment letters in India

In India, several types of allotment letters may be issued depending on the type of property being purchased and the terms and conditions of the sale. Some common types of allotment letters include:

  • Flat allotment letter

    A flat allotment letter is issued on purchasing a flat under construction. It is issued by the developer or builder and mentions all information regarding the flat.

  • Car parking allotment letter

    The letter of allotment for a car parking space is created when a parking space is allotted to someone. It contains details like the name, address, type of vehicle, vehicle number, etc.

To sum it up

In conclusion, an allotment letter is a crucial document that serves as proof of allotment and can be used to obtain loans along with other documents or other financial assistance if necessary. It is essential for buyers to carefully review the terms and conditions outlined in the allotment letter before signing it to ensure that their rights and interests are protected. One must also not sign any contract where the date of allotment or the builder’s liability is not explicitly mentioned.

Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim /disown any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.


What is the difference between an allotment letter and a sale deed?

The selling agreement is the most important contract; however, an allotment letter of the property will be useful if the builder needs to deliver the amenities that were promised.

Can the allotment letter be Cancelled?

The booking fee that was paid to receive an allotment letter is completely refundable. The Builder must fully refund the fee if the consumer decides to cancel the reservation and cannot keep any of the money.

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