What is a demand letter in real estate?
A demand letter is a builder’s letter asking a buyer to pay the next instalment, showing the stage reached, the amount, GST, the buyer’s TDS, overdue interest, the due date and the total.
Also called demand note, payment demand.
Under a construction-linked plan, each demand follows a certified construction stage. Under a time-linked plan, it follows the calendar.
A clear demand letter has, in order:
- the project’s RERA registration number, and a unique letter number and date;
- all buyers’ names, the unit and the booking reference;
- the stage reached and the date it was certified;
- the instalment, as a share of the agreement value, and its amount;
- GST on the instalment, shown separately;
- any overdue amount from earlier demands, with interest to date;
- the TDS the buyer must deduct and deposit, with the builder’s PAN;
- the total payable, the due date and the bank account for payment.
The commonest problems are demands raised before a stage is certified, letters sent to only the first applicant, and old tax section or form names left in the template.