What is an Allotment Letter? Meaning, Contents & Importance
📅 Updated June 2026
⏱ 8 min read
✅ Fact-checked
📖 Quick Definition
An Allotment Letter is an official document issued by a builder or housing authority confirming that a specific residential unit — identified by floor, flat number, and carpet area — has been allotted to a particular buyer after the booking amount is paid.
Issued by: Builder / Housing Authority / DDA / MHADA | When: After booking amount payment | Legal Status: Provisional — precedes Agreement for Sale
⚡ At a Glance
Issued By
Builder, housing authority (DDA, MHADA, BDA, CMDA) or developer
When Issued
After payment of booking / token amount
Legal Nature
Provisional allotment — not final ownership document
Contains
Unit details, price, payment schedule, possession timeline
Used For
Home loan applications, agreement for sale execution
Validity
Till Agreement for Sale is signed or as specified
RERA Status
Must be consistent with RERA-registered project details
What is an Allotment Letter?
An Allotment Letter is the first formal document you receive from a builder after paying the booking amount. It is the builder's written confirmation that your chosen unit — say, Flat 3B on the 7th floor — has been reserved specifically for you. While it is not the final ownership document, it is a critical milestone in your property purchase journey.
Think of it as your official queue ticket in the property purchase process. It comes before the Agreement for Sale and long before the final Sale Deed. Banks accept the allotment letter as the first document for processing a home loan.
💡
Government Housing Schemes: For government bodies like DDA (Delhi), MHADA (Maharashtra), or BDA (Bangalore), an allotment letter is issued after a lottery or draw. It is highly sought after and has legal weight as it comes from a statutory authority.
Conditions of allotment (cancellation policy, etc.)
Allotment Letter vs Agreement for Sale
Aspect
Allotment Letter
Agreement for Sale
When Issued
Immediately after booking amount
After 10% or agreed milestone payment
Legal Weight
Provisional — not fully enforceable
Fully legally binding contract
Registration
Not registered
Registered at Sub-Registrar office
Bank Acceptance
Yes — for initial loan processing
Yes — for full loan disbursement
RERA Protection
Limited
Full RERA protection applies
Allotment Letter and Home Loans
Banks and NBFCs require the allotment letter as one of the first documents when you apply for a home loan on an under-construction property. Based on this document, the bank:
Verifies the property details and builder credentials
Issues an in-principle or provisional loan sanction
Begins their own technical and legal due diligence
Disburses the first tranche once the Agreement for Sale is executed
⚠️
Check RERA Details: Always cross-check the unit details in the allotment letter with the project's RERA registration. The carpet area, floor, and possession date should match exactly what is registered on the RERA portal.
If You Need to Cancel
If you cancel your booking after receiving the allotment letter but before signing the Agreement for Sale, the cancellation terms in the allotment letter govern the refund. Typically, builders deduct 1–2% of the booking amount as a cancellation fee. Always read these terms carefully before booking.
An allotment letter is an official document issued by a builder or housing authority confirming that a specific residential unit has been allotted to a buyer after payment of the booking amount. It contains unit details, agreed price, payment schedule, and estimated possession date.
An allotment letter is a provisional document that creates a moral and contractual commitment but is not as legally binding as the registered Agreement for Sale. It can be used in legal proceedings but is not a substitute for the registered agreement or sale deed.
Banks use the allotment letter for initial processing and in-principle sanction, but they typically require the registered Agreement for Sale for full loan disbursement. Some banks disburse the first tranche based on the allotment letter for projects by reputed builders.
If a builder cancels your allotment without valid reason after issuing the letter, you can file a complaint with the state RERA authority. Under RERA, you are entitled to a full refund of the booking amount with interest at SBI MCLR + 2% per annum from the date of payment.
A provisional allotment letter is issued when the project is not yet approved or RERA-registered. It indicates that the unit is being provisionally held for you subject to project approvals. Be cautious — if the project is not yet RERA-registered, your legal protection is limited until registration happens.
