• Token amount for a purchase

I have decided to purchase a house and approached a builder. I have given him a token amount last month to provide the land documents. we have mutually signed stating that if there is any kind of objections then the entire amount to be given back. After 3 weeks we have told the builder that due to some circumstances we would have to drop the deal. The builder is emotionally blackmailing that he would be at loss. I have 2 questions. 
1) What is the main role of Token amount? Should it be treated as a confirmation of the sale? 
2) Does the builder have the right to decline the amount?
Asked 12 months ago in Property Law from Vijayawada, Andhra Pradesh
Religion: Hindu
1) it all depends upon the terms and conditions mentioned in agreement for sale 

2) earnest money Is paid and generally time frame is set for making full payments 

3) if you fail to honour your commitments builder can forfeit earnest money paid by you 


4) builder can cancel agreement for sale 
Ajay Sethi
Advocate, Mumbai
23389 Answers
1229 Consultations
5.0 on 5.0
1. The token amount is nothing more than an assurance to the seller or builder, as the case may be, that the prospective buyer is serious about initiating the deal. 

2. If you have signed an agreement wherein he has agreed to return the money then he is liable to do so, failing which you can initially issue him a lawyer's notice and then file a lawsuit for recovery of money with compensation.
Ashish Davessar
Advocate, Jaipur
18260 Answers
450 Consultations
5.0 on 5.0
1) What is the main role of Token amount? Should it be treated as a confirmation of the sale? 
Token amount means an advance amount or part of sale consideration amount given to the vendor by the buyer as an assurance for the transaction.  This can be recorded in the sale agreement deed. 
A sale agreement deed can be drawn on the agreed terms and conditions between both and get it registered.



2) Does the builder have the right to decline the amount?
If there is a termination clause n the agreement, the builder cannot deny the payment, you should confirm the same and issue a legal notice if he reuses to return the advance amount. 
T Kalaiselvan
Advocate, Vellore
14170 Answers
128 Consultations
5.0 on 5.0
Hi, Token amount will not be considered as confirmation of Sale and secondly if the deal is not completed then it is the obligation on the part of the Builder to repay the money.
Pradeep Bharathipura
Advocate, Bangalore
4105 Answers
133 Consultations
4.3 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Property Lawyers

T Kalaiselvan
Advocate, Vellore
14170 Answers
128 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23389 Answers
1229 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18260 Answers
450 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12143 Answers
233 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5248 Answers
54 Consultations
4.9 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2792 Answers
41 Consultations
4.9 on 5.0
Atulay Nehra
Advocate, Noida
444 Answers
15 Consultations
4.7 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
873 Answers
43 Consultations
5.0 on 5.0
Ajay N S
Advocate, Ernakulam
1918 Answers
19 Consultations
5.0 on 5.0
S J Mathew
Advocate, Mumbai
1954 Answers
66 Consultations
5.0 on 5.0