You paid token money. The deal fell through.
You saw a plot in Lahore, or Karachi, or a smaller city. You liked it. The dealer asked for token money and you paid it. A week later the seller says the deal is off. Or you changed your mind and now the seller will not return your money.
Who keeps the token? What does the law say? This is one of the most common property questions in Pakistan, so here is the plain answer.
What is token money?
Token money is a small advance you pay to hold a property while you check the papers. Bayana is the bigger earnest payment that locks the deal. In practice people use both words loosely. There is no law that fixes the amount. It is whatever both sides agree.
The important part is what token money does not do. It does not buy the property. Under the Transfer of Property Act 1882, a contract for sale does not, by itself, create any interest in the property. You are not the owner until a registered sale deed is done. The token is a promise, not a transfer.
Is token money legally enforceable?
Yes, but only when the deal is written down. The paper, called an iqrarnama or agreement to sell, must name the property, the price, the deadline, and what happens to the token if either side backs out.
The Supreme Court has said that a paper which only mentions money, without clear acceptance and terms, is a mere proposal, not an agreement (1990 SCMR 28). On the other hand, a token receipt that carries the terms can act as an agreement to sell (2019 PLD 346 Lahore). So the writing decides.
If the buyer backs out, can the seller keep the token?
Only if the agreement says so. And even then, the court is the final judge of the amount. Under section 74 of the Contract Act 1872, when a contract names a sum for breach, the injured party gets reasonable compensation, not automatically the full named sum.
The Supreme Court looked at this again in June 2026. A buyer in Sialkot paid Rs 8 lakh as token on a plot and promised to pay the balance of Rs 6.48 million by a fixed date. The agreement said the token could be forfeited if he did not. He missed the date, then sued the seller. The Court dismissed his suit. A forfeiture clause makes time important (Associated Press of Pakistan report).
If the seller backs out, what can the buyer do?
Two options. The buyer can sue for the return of the token plus compensation for the loss. Or the buyer can sue for specific performance, which asks the court to force the seller to complete the sale.
Courts take this remedy seriously. The law presumes that money cannot fix a broken promise to sell land (Specific Relief Act 1877, section 12). But the same law says specific performance is discretionary (section 22), and the buyer must show he is ready and willing to pay.
The rule that surprises most buyers: deposit the balance in court
If you sue for specific performance, you cannot just say you are ready. Since the 2017 Supreme Court judgment in Hamood Mehmood (2017 SCMR 2022), the buyer must ask the court for permission to deposit the balance on the first appearance. A buyer who skips this can lose the suit.
Later judgments softened the edge. Dismissal is only proper when the court order warned of it (2021 SCMR 1270), and courts give at most two chances, with an explicit warning on the last one (PLD 2022 Lahore 372). The point stays the same: a serious buyer puts the money where his mouth is.
The "double token" belief
In the market you will hear that a seller who backs out must pay double the token. That is a custom of the trade, not a written law. Courts do not order double automatically. They order what is reasonable in the case. If the seller broke the deal and you lost time and money, the court can award compensation on top of the refund. The written agreement is what the court starts from.
Steps to protect your token money in Pakistan
1. Get everything in writing. Property, price, dates, and the forfeiture clause.
2. Write who pays the taxes and registry charges.
3. Keep the receipt and a copy of both CNICs.
4. Check the property before you pay. Our guide on how to check a property in Pakistan before buying shows what to verify.
5. Pay by bank transfer or cheque. Cash leaves no proof.
6. If the seller stalls, send a written notice demanding completion or return of the token.
Red flags that mean trouble
A seller who takes token money from more than one buyer. A seller who will not show the fard. An owner who is really a dealer. These are the situations where people lose money.
Before you pay anything, check the ownership records and learn what a fard actually shows. Token money is only as safe as the paper behind it. For more guides like this one, see the Lexiber blog or ask Lexiber at lexiber.com.
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