I am looking for some advise here. I am planning to purchase a house(a plot with a small building constructed) in Kerala. The value is approx 40L. Since I want the bank to finance as much of the sale amount as possible, I want to enter into an agreement of sale with the seller and want to apply for loan based on this. As I understand the token advance at the time of the agreement can be a small amount to the tune of 1 or 2L. But the seller initially was insisting that I pay 50% of the sale value at the time of the agreement. I told him that that is not possible since I will be looking for 80 to 90% loan as the bank may provide me. Despite that he is not willing to settle for a token advance of less than 5 lakhs. My questions are
1. Is he justifed in asking a significant sum like 5L. What is the amount normally considered as token advance/earnest money in such value transactions.
2. If after I pay 5L, he defaults either due to his personal reasons or because titles are not clear, how difficult is it to claim the amount back.
Thanks,
Venkat