An allotment letter is a crucial document a buyer needs to be aware of before buying a property or applying for a home loan.
An allotment letter is crucial for buying a property. The owner of the house produces an allotment letter once the buyer finalises the property. It is given to the initial owner of the property, and if the property is sold to another party, the respective owner is required to give a copy of the allotment letter to the buyer. During a home loan, many banks give importance to the allotment letter because it helps in the verification of the property and also ensures that the property is not under any legal or other relevant issues. The allotment letter gives relevant information like the physical description of the property, delivery date, construction terms, schedule, and construction facilities, the due amount that is needed to be paid to the builder, and the obligations given by the builder in case of delay and payment.
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Bank’s Policy in the Absence of an Allotment Letter
In case the owner loses the original copy of the allotment, every bank has its policy. Different banks have different conditions for providing home loans. In some cases, the owner is required to lodge an FIR and submit an indemnity bond, which helps in obtaining a Certified True Copy (CTC). Some banks do not provide loans based on CTC. Publishing a public notice also ensures that there are no objections and claims regarding the house. It should be published in a local newspaper in the local language, depending on the location of the house, and in English as well, with details about when a claim or response can be made. Some banks also consider the duration of the house’s possession by the owner, as if the property has been in continuous and unbroken possession for more than 12 years, it helps add legitimacy to the home loan.
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Things to Ensure Before Buying a Property
In the absence of an allotment letter, a buyer should always cross-check with the bank and understand the criteria for loan sanctioning. Bank guidance is important in such cases. The buyer should also ensure that public notice is published against the loss of the allotment letter in the local newspaper and English as well.
