Real estate market can be harsh and brutal especially when you are not aware of the basic real estate terminologies. The last thing you want is to portray yourself as a beginner and get intimidated by all the real estate agents in the market.

Token money and Bayana are some of the most recurring terms you will hear prior to purchasing a property.

Let’s discuss the concepts of token money and bayana.

Token Money

So, what is token money? Token money is a small amount of money that the buyer presents as a serious intention of purchasing the property. The token amount is paid on the mutual agreement between the buyer and seller about the selling price.

This token will cause the seller to suspend any kind of negotiations with other interested parties until the buyer makes it final. In most cases, these agreements are facilitated by an agent who holds the information of everyone involved in the transaction.

When you are dealing with an agent who is directly associated with the respective society, the agreement will be signed against all the terms and conditions on the agent’s letterhead. The details include the token amount, name of buyer and seller, property information and the time period in which the buyer must make the remaining payment. There are two subcategories of token amount:

  • Conditional token
  • Confirmed token

Conditional Token

A conditional token is a token received on soft terms and conditions. When the buyer decides to purchase the property, a token amount is paid ranging from PKR 25,000/- to PKR 100,000/- depending on the value of the property. If for some reason, the deal falls through, the token money is refunded to the buyer and there are no penalties.

Furthermore, when the conditional token is paid, the agent can then verify the ownership of the seller from the relevant society to make sure that the seller is the actual owner of the property.

For this stage, the seller grants written consent to allow the respective authority to share the particulars of possession and legal status with the purchaser, whose name and CNIC number are also indicated on the application. Attached to the application is a duplicate of the plot owner’s CNIC.

Confirmed Token

The confirmed token is the legal token amount paid on the basis of a mutual agreement between the buyer and the seller. The agreement will hold all the terms and conditions. The terms will include information such as the time frame in which the bayana needs to be paid, the selling price of the property and the penalty charges if one of the parties back out of the deal. If the buyer fails to meet the bayana deadline, he/she loses the token money.

If the seller backs out of the deal then he/she is obligated to pay twice the amount of the token money to the buyer. Confirmed tokens are relatively higher than the conditional token and less than the bayana payment. After the token is paid, the next step is the bayana.

Bayana

Bayana is the signed agreement on a stamp paper with conditions set by the buyer and seller. It is most commonly made after one week after the token amount payment. The conditions include the time-frame of the ownership transfer between the buyer and seller and the payment of the remaining amount (usually paid within 30 days).

Bayana, like a token, is paid by the buyer to the seller and is meant to show the intent and willingness of the buyer to actually buy the property. The purpose of Bayana is to allow the buyer to procure finances for the purchase. However, unlike a token, it follows the contract and the terms and conditions about the bayana are usually a part of the contract.

It is also the contract which determines what happens to the bayana if the deal falls through. In the case, if the deal falls through after the bayana due to some problems on the seller’s end, they are legally bound to pay twice the bayana amount. If the buyer backs out then they lose the bayana amount.

During this time, a Statement of Dues (SOD) is generated by the relevant society which shows the remaining outstanding dues that must be paid before the transfer. Next, the seller applies for the No Demand Certificate (NDC). The NDC is provided by the society which shows that the seller has no other demands. 

Token money and bayana are two very similar yet different things, however, in some situations, they are considered the same. Keep in mind that each society has transfer methods that are different from each other.