Token amount plays a vital role in a particular property transaction to demonstrate that a buyer intends to purchase. However, in the event of a cancellation of sale, disputes often arise between the buyer and seller over this amount. Therefore, one must know the rights and legal steps for the recovery of this amount when either the buyer or the seller cancels a deal.

This blog describes what would constitute token money, when token money refund, and how the online legal consultant can assist you in recovering the same.

What is Token Money?

In property deals, it is a small amount of payment made by a potential buyer as an indication of serious intent to buy the property. It usually varies between 1% and 5% of the total property price and normally happens before any signing of a formal agreement.

Key Features of Token Money:

1. Non-Refundable: Most of the time, token money is considered non-refundable if the buyer cancels. However, in the case of the seller’s fault, the buyer can demand a refund.
2. Negotiable: The amount is not fixed and will vary according to what the buyer and seller have agreed upon.
3. It is part of the total price: Token money is included in the total property price instead of being charged separately. 
4. Shows Commitment: It acts as a deposit to the extent that it demonstrates the buyer’s actual interest in the deal.

Can You Get a Refund If the Deal Falls Through?

Refund of money given as a token depends on the cause for cancellation and clauses in sale agreements.

When the Buyer Cancels the Deal:

1. Valid Reasons: When a buyer cancels the deal for some financial issues and emergencies, the sellers are allowed to refund this money back with just some minor cuts (generally between 5% and 10%).
2. Personal Choice: The seller-prescribed fraction of a portion or all of the token money will be withheld as a penalty for a buyer’s withdrawal on the basis of invalid reasons such as choosing another property.
3. Missed Payments: Payment deadlines are not met, then token money is forfeited by the seller from the buyer.

When the Seller Decides to Withdraw:

1. Without Justification: The seller cancels the deal without justifiable reasons; the same seller will be required to refund the token amount to the buyer.
2. Project Delays: The buyer can claim his refund and also seek additional compensation according to RERA rules since the construction has been delayed or the terms failed to comply.
3. RERA Guidelines: Sellers are obliged to process refunds within 45 days from the date of cancellation.

Legal Steps to Take to Recover Token Money

In case of a dispute over token money, the following legal steps can be taken:

1. Send a legal notice: First, send a legal notice to the seller clearly stating grounds for cancellation and demand for refund. Also attach any relevant clauses in the sale agreement that strengthen your case. Be sure to send the notice by registered post or e-mail to be able to prove delivery.
2. Approach RERA: If the seller refuses to provide any refund, as well as ignores the note of will/cancellation, it must be reported to RERA. Different issues have found a solution with the help of the consumer court.
3. File a Suit in Civil Court: The breach committed by the seller can cause you to go to civil court, which will give you the option of having the entire token amount refunded to you, perhaps with damages as well.

Important Points To Remember

1. Read the terms in the sale thoroughly before you make any legal move.
2. Maintain all records of communication with the seller in writing and formal.
3. Have an idea of RERA rules and the Indian Contract Act, 1872, that legally protects the remedies for such disputes.

How Zolvit Can Help You

Disputes over token money can be complicated, but Zolvit is here to help.

• Expert Advice: Our property attorneys will evaluate your case as far as your rights are concerned. 
• Document Review: We are going to read your sale agreement to check if all terms have been framed in your interest. 
• Dispute Resolution: We will represent you in negotiations, draft complaints with RERA, or take the matter to court as may be needed. 

Conclusion 

Token money-related disputes in property transactions can have an emotional overbear. Be it the buyer or seller, the rights of people depend on the basis of the agreement along with grounds for cancellation. With more understanding about these kinds of processes and with some help from professionals, you can indeed file this stressful issue as early as possible. 

If you are stuck in a token money dispute, Zolvit will help you through the whole process. Contact us today for the best legal advice with no worries.

FAQs Related to Property Transaction Disputes