What is Bayana?

Elaborated below is all about Bayana, also known as agreement to sell

Once a buyer and seller reach a verbal agreement to enter into a contract, regarding the purchase of an immovable property, a process starts to formalise the deal. Among the many crucial stages of a property transaction is the signing of the agreement to sell, also often referred to as the agreement to sale or sale agreement. In India’s eastern and northern states, which includes Uttar Pradesh, Bihar, Jharkhand, Punjab, Rajasthan, Delhi, Haryana and Punjab, this agreement is known as Bayana agreement.


Bayana agreement


What is Bayana?

The term Bayana (बयाना) basically denotes the advance payment that the buyer has already made, to show the seriousness of his intent in purchasing the property. It is a certain percentage of the deal amount, also known as token money that the buyer pays to the seller in good faith.


Is Bayana different from token money?

Bayana is the Hindi term for token money. However, there are two types of token money or Bayana that a buyer pays to the seller during the property purchase.

Bayana after verbal agreement: While the exact amount may differ, buyers in India typically pay 1% of the deal value as the Bayana, as soon as they strike a deal with the seller. Since no documentation has yet taken place, neither party is liable to pay any penalty, if the deal falls through. In such a scenario, the seller will typically return the amount to the buyer.

Bayana after initial documentation: After paying the initial token amount, both parties start to formalise the transaction by way of execution of the agreement to sale or agreement to sell. Under the existing laws, this document, based on which the future transaction will take place, needs to be registered by the parties concerned. While signing the document, the buyer will pay another part of the deal value, as advance or Bayana. This may be between 10% and 30% of the deal value. The remaining amount is paid to the seller during property registration.


What is Bayana agreement?

A document that acts as the blueprint for the future sale of a house, is known as Bayana agreement or agreement to sell. Along with other things, this document clearly mentions the payment that the buyer has made to the seller so far, to stop him from entertaining any other buyer and to book the property in the buyer’s name. Registered under the Indian Contract Act, 1872, the Bayana agreement is legally binding on both the parties. Once a seller has taken the Bayana and a Bayana agreement has been signed between the two parties, both the parties are obliged to abide by the terms and conditions stated in the agreement.

See also: Agreement for sale versus sale deed: Main differences


Is Bayana refundable?

While the initial token amount may or may not be refunded, if a deal falls through in the absence of a written document, advances paid to the seller after the signing and registration of the Bayana agreement have to be refunded to the buyer in case the seller in unable to proceed with the sale, because of an issue on his part.

Also read: What to do if a buyer backs out from a property deal


Is Bayana a legal document?

As the document is governed under the Indian Contract Act, 1872, the Bayana agreement is a legal document, which can be admitted as legal proof in the court of law, in case of any dispute between the contracting parties.



Is Bayana agreement the same as agreement to sell?

In several eastern and northern Indian states, the agreement to sell is known as the Bayana agreement.

What is token money in real estate?

Token money is the amount the buyer pays to the seller, after reaching an agreement to enter into a property transaction.

What do you mean by agreement to sell?

An agreement to sell is a legal document, which sets the terms and conditions on the future transaction of a property. Apart from other things, it also clearly mentions the amount that the buyer has paid the seller so far.


Was this article useful?
  • 😃 (7)
  • 😐 (3)
  • 😔 (2)