What is a Letter of Allotment and its Types in Real Estate

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Understanding everything about a letter of allotment is essential whether you’re a novice buyer or a seasoned investor. This document confirms the allocation of a property or unit to a buyer by a developer or builder. It marks the beginning of the buyer’s journey toward owning their dream property. Learn about the allotment letter meaning, its types, and why it is essential to the real estate sector.

What Is an Allotment Letter?

An allotment letter is a formal communication from a real estate developer or builder to a prospective buyer. It signifies that the developer has accepted the buyer’s application for a particular property or unit and is allotting it to them.

If you don’t know what an allotment letter is, then here’s a simpler explanation. The letter typically includes essential details about the property. They include the property’s description, unit number, floor plan, price, possession date, and other terms and conditions. The letter of allotment marks a significant milestone as it initiates the legal binding between the buyer and the Real estate developer.

Types of Property Allotment Letters

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Allotment letters come in different forms, depending on the buyer’s and developer’s needs.

Here are some commonly found types of flat allotment letters.

Accommodation allotment letter:

When providing housing for employees or staff members, the accommodation allotment letter takes center stage. This letter is addressed to the director or management of the business. It formally requests that space be set aside for the employees. The letter allows customization to suit specific preferences and requirements. Its flexible customization makes it an ideal choice for organizations of all sizes.

Property flat allotment statement:

Purchasing a flat in a building under construction requires a property flat allotment statement from the builder. This letter contains vital information about the payment schedule and available house plans. It also elaborates on the builder’s responsibilities, particularly in case of any delays in flat delivery. It outlines additional maintenance costs, ensuring transparency in the transaction process.

Builder allotment letter:

As an essential document in property transactions, the builder allotment letter is issued when the initial payment for an apartment is made. This payment acts as the initial deposit, and the letter outlines the terms and conditions of the agreement. A noteworthy feature of this letter is the provision for customers to cancel the contract and receive a refund. This provision is only enacted if mentioned in the deed.

Car parking allocation letter:

Parking space woes are a common concern, and the car parking allocation letter seeks to address this issue. Tailored to the requester’s preferences, this letter formally requests a parking space and includes relevant details. These details include the payment date, license plate number, and address. Priority is given to higher officials like the president or chairman, ensuring a fair distribution of parking spaces.

Residential plot allocation letter:

The residential plot allocation letter becomes a significant document for aspiring homeowners looking to secure a residential plot. Often advertised in public journals, applications for residential properties are processed through a random selection process. Successful applicants receive a letter of allocation outlining the terms and conditions for obtaining the plot. These terms elaborate on various factors, including the mode of payment.

Commercial space allotment letter:

When leasing or purchasing commercial properties, such as office spaces, retail stores, or warehouses, a special letter of allotment is used by the developer. A commercial space allotment letter is issued to the tenant or buyer in such cases. This letter confirms the allotment of the specified commercial space. It usually includes details about the commercial space’s lease or sale agreement terms.

Allotment letter for villas or bungalows:

This type of house allotment letter is used for upscale residential projects with villas or bungalows. It is given to buyers who have been selected and allocated a specific estate or bungalow unit. The letter confirms the unit details, payment terms, and other relevant information. This type of letter is similar to letters used for allocating residential plots.

Related :Builder Buyer Agreement

Why is the Allotment Letter So Important?

Issuing a house allotment letter   is important since it clearly elaborates on the various parameters of a construction.

What is an allotment letterHere are some points which explain the significance of such letters.

Legal validity:

The flat allotment letter is a legally valid document that binds the buyer and developer in a contractual agreement. It outlines the terms and conditions under which the property is allocated to the buyer. These clauses ensure transparency in the transaction.

Protection for buyers:

The letter offers protection to buyers by specifying the agreed-upon price, possession date, and other essential terms. It prevents the developer from changing these aspects unilaterally, providing buyers with a sense of security.

Loan approval:

If you don’t know what an allotment letter is, then problems arise if you borrow money to purchase a home. For buyers seeking bank loans to finance their property purchase, the allotment letter is an important requirement by financial institutions. It validates the property’s existence and the buyer’s commitment to the purchase.

Avoiding disputes:

The letter’s detailed information helps in reducing the scope for disagreements between the buyer and the developer. It minimizes the chances of potential disputes during or after the property acquisition process.


Proof of ownership:

The allotment letter serves as initial proof of ownership if any individual or NRI buy a property in India. It establishes their right to the property. It can be used to demonstrate ownership during the interim period until the final sale deed or registration process is completed.

Record of payment:

The letter typically includes details of the payments made by the buyer to the developer. This record can be beneficial in case of any payment-related disputes or discrepancies that may arise during the construction or possession phases.

Confirmation of allotment:

The allotment letter confirms that the developer has allotted the buyer a specific property or unit. It specifies the unit number, floor, or other relevant details, eliminating any confusion about the property’s identification or construction.


Resale and transfer:

The house allotment letter establishes the transaction’s legitimacy if the buyer wants to sell the property before the registration process is completed. It is used to prove that the property was indeed allotted to the seller and can be transferred to the new buyer.

Taxation purposes:

This letter may be required for taxation purposes, especially during the assessment of property taxes. It can also be essential while availing tax benefits related to home loans or investments.

Related : What is Commencement Certificate


Allotment Letter Format

The allotment letter of flat format may vary slightly based on the developer’s preferences, but it generally includes the following components:



In allotment letter format, the document typically starts with a prominent heading indicating it as an “Allotment Letter.”


Date and reference number:

The date of issuance and a unique reference number are essential for record-keeping and future correspondence in allotment letter format.


Buyer and developer details:

The letter should mention the buyer and developer’s name, address, and other contact details.


Property details:

In allotment letter format, comprehensive details about the construction of the property, such as unit number, floor plan, size, and specifications, should be included.


Price and payment terms

The agreed-upon price, payment schedule, and applicable discounts or charges should be clearly stated.


Possession date:

The anticipated possession date or the timeframe within which the developer expects to hand over the property to the buyer should be mentioned.


Terms and conditions:

All the terms and conditions related to the allotment, cancellation policy, penalties, etc., should be explicitly stated in allotment letter format.


Buyer’s acceptance:

There should be a provision in allotment letter format for the buyer to acknowledge and accept the terms of the Allotment Letter with their signature.


Can the buyer make changes to the allotment letter? 

Generally, the letter of allotment is a formal document issued by the developer, and changes to its content may not be entertained. However, buyers can seek clarification or negotiate specific terms before accepting the letter

Is the allotment letter legally binding? 

The allotment letter is legally binding, representing a formal agreement between the buyer and the developer.

What should a buyer do after receiving the allotment letter? 

After receiving the letter of allotment, the buyer should review its terms and conditions carefully. If satisfied, they should sign the letter and return a copy to the developer and any necessary payments.

What does a real estate commencement certificate mean?

An official certificate known as a commencement certificate is one that the regional planning or municipal authority issues. It gives a real estate developer authorization to begin work on a particular property.

Summing Up

The flat allotment letter holds immense significance in the real estate industry as it marks the beginning of a buyer’s journey toward property ownership. Its various types cater to different project stages, such as construction. Meanwhile, its legal validity ensures transparency and protects the interests of buyers and developers. By understanding the importance of the letter and its different types, prospective property buyers can confidently and securely navigate the real estate market.