Buying a house? Know how to safely pay advance, token money for property, clauses to include in 'agreement to sell'

economictimes.indiatimes.com:

While making such a payment is normally unavoidable, it is important to ensure that the payment is acknowledged. There should also be proof of token money being paid. This ensures the safety of the money if the house owner later refuses to sell the property.

Here are some things you should keep in mind while paying token money to a seller.

Make payment electronically, keep amount low

Meghna Mishra, Partner, Karanjawala & Co, says, «Token money is typically paid to show an intent or commitment to purchase the property. If such payment is made without any formal agreement or document being executed, then it is advisable to pay this amount via a cheque, bank transfer or any other online method to ensure that there's a clear paper trail and a receipt is issued to acknowledge the payment.»

Apart from using normal banking channels, one can also use an escrow account to pay token money.
Anand Moorthy, Co-Founder & CBO-Asset Management Services & Data Intelligence, Square Yards — a real estate company, says, «Homebuyers can transfer the token money into a digital escrow account as it provides a secure means of completing the transaction. This process helps in minimising the risk of fraud and ensures that both parties are protected. Additionally, it's prudent to keep the token money amount as low as possible, given that this payment can be non-refundable. In the unfortunate event of a deal cancellation, the entire amount becomes non-recoverable.»

Agreement to sell

At the time of making the token payment, the buyer and seller must get an «agreement to sell» drafted. Mani Gupta, Partner, Sarthak Advocates & Solicitor, says, «It is usual for both buyer and seller to enter into an agreement to sell. The details of the token