roy.abhi

Hi Folks,
For booking against Jaypee Greens Aman, Jaypee is issuing "Provisional Allotment Letter". Can anyone help me in understanding :

(a) what are the legalities of this kind of allotment letter?

(b) Why the term provisional is used, Is it a common practice by all the builders. Jaypee guys are trying their best to convince their buyers the fact that this is their norm.

(c) This letter clearly mentions the description of promised area, map, payment plan and penalty. Is there anything more which I should look for?

Thanks
Abhishek Roy

Venkytalks

This beats 2% tax to be paid for builder buyer agreement in UP.

Legally PAL is not binding and buyer has no rights.

Govt of UP is causing harm to RE investors- and not collecting any tax in the process- since nobody gets BBA so that they do not pay tax

nibha

Can you explain this a bit more .... I din't get the tax funda
"Govt of UP is causing harm to RE investors- and not collecting any tax in the process- since nobody gets BBA so that they do not pay tax"

Venkytalks

Govt of UP charges 2% of the agreement value as a tax when a builder buyer agreement is notarised.

Because of this, most companies do not give an agreement. So the 2% tax is factually not collected. Except for a small few who are ready to shell out 2% and get the agreement.

But the buyer is left without a legally valid agreement, only an allotment letter. Without a legally binding agreement, the buyer is at the mercy of the builder and has no legal recourse - for example, if the project stalls, we cannot take over the project by forming an association.

The govt should not collect this tax. It should collect only stamp duty, which it is anyway doing. If they did not collect this tax, all builders will give the agreement which will bring transparency and accountability to the builder's operations. As is happening in Gurgaon, which is a much better place for free and fair RE transactions

So by keeping this tax, govt gains nothing - hardly any tax. But the public loses - and the builder politician mafia is benefited.

basantp

But, AFAIK, no bank will give loan without a builder-buyer agreement in place?

What tricks a builder will use to overcome this?

ajay_delhi

Builders Buyers agreements are drafted by builders and it is in favour of Builders.
Builders buyers agreement is not having clauses in favour of buyer then why pay 2% on its registration.

Venkytalks

Exactly. Nobody does.

Bank gives loan on a tripartite agreement, not BBA

ajay_delhi

Is it mean that BBA on 100 Rs stamp is not legally binding to buyer.
and non payment of 2% registrataion, actually works in favour of buyer, as BBA favours builders.

Venkytalks

Now you are confusing the issue.

BBA has a 2% cost in UP.

It is on 100Rs stamp paper in gurgaon, and I dont think there is any registration cost.

It is legally binding, but is drawn up by the company legal dept. In Gurgaon, they print it in a book format and the clauses are against the buyer and in favour of builder. Buyer has to take it or leave it.

I dont know the format of BBA in UP.

But In UP also, if the same kind of agreement as gurgaon is given, it is not worth paying 2% from my pocket. However, since I have only allotment letter and no BBA, I have no legally enforceable agreement, since did not sign BBA (to save 2%).

Basically we are at the mercy of the builder, more so in UP than in gurgaon

ajay_delhi

Dear Venky
thankyou for your clarifaction.

could you put some more light on issue,

In Noida we sign agreement on 100Rs stamp without notory/registration.

and if builder want to use this agreements clauses for his benefit in future.

Can we challange it legelly as we have not signed this agreement in presence of neither Notory nor paid registration cost.

As per my understanding simple stamp paper signed document without registration is legelly void.