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All you need to know about the token and the bayana

Posted by Muhammad Imran on October 5, 2016
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All you need to know about the token and the bayana

For the occasional property buyers and sellers, the procedure of carrying out a real estate transaction is anything but simple. From a distance, real estate dealings seem overwhelming, especially with twisted stories about scams flying around all the time.

If you, too, have similar concerns and aren’t familiar with the related procedures, congratulations! You have landed on the right page of this magazine. In a bid to make the property buying and selling procedure comprehendible, I have gotten down to the nitty-gritty of two crucial terms: the token and bayana.

Token

The token is a small amount of money (compared to the market value of the property) that has to be paid by the buyer as an indication of serious intent to purchase a property. This step is taken after mutual consent has been established between the buyer and seller about the selling price. In most cases, the deal is facilitated by an agent, who possesses the verified contact details of the seller.

If you are dealing with an agent who is registered with the respective society where a property is located, the agreement details are written on the agent’s letterhead. This includes information about the token money, the name of the buyer, plot number, society name, the size and price of the property, and the time frame in which the buyer has to make the remaining payment.

There are two types of token: conditional and confirmed.

Conditional token
The token given and received on soft terms and conditions is a conditional token. When a buyer decides to acquire a certain property, he offers a small amount ranging from PKR 25,000 to PKR 100,000. If, for some reason, the deal falls through, there is no penalty and the same amount is returned to the buyer.

After paying the conditional token amount, the buyer gets the property verified by the respective housing society to make sure the seller is the actual owner. For this step, the seller grants permission in writing, which allows the respective authority to share the ownership details and legal status with the buyer, whose name and CNIC number is also mentioned on the application. A copy of the plot owner’s CNIC is attached to the application.

Confirmed token
Documented token money, in which the terms and conditions are mutually set between the buyer, seller and the agent (if there is an agent mediating), is called the confirmed token. This agreement includes terms such as the time frame in which the bayana needs to be paid, the selling price of the property and the penalty in case one of the parties backs out. If the buyer fails to meet the bayana deadline, he loses his token money; if the seller backs out from the deal, he is legally bound to pay double the amount of the token to the buyer.

If the buyer is in a position to purchase the property at hand within a week or two, the confirmed token also acts as the bayana. The confirmed token is usually an amount higher than conditional token and less than the bayana.

Bayana

Bayana is a formal agreement written on stamp paper with related conditions set by both the buyer and the seller. It is usually paid one week after the token money. Terms include the time frame for the property transfer and the payment of the remaining amount, which is often between 10 to 30 days but can be more.

Ideally, the bayana amount should be one-fourth of the total price. The longer the time frame to clear the remaining amount, the higher the bayana. During this time, the seller applies for the No Demand Certificate (NDC). This certificate is given by the respective housing authority in the presence of both parties. The property is transferred right away and the seller receives the bank draft.

If the deal falls through after the bayana due to some problems on the seller’s end, he is legally bound to pay double the bayana amount as penalty. If the buyer backs out, he loses the bayana amount.

Hope this information clears up some real estate processes for you! It’s an exciting time to be in the property game in Pakistan, so there’s no reason for you to miss out.

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