Tripartite Agreement: Meaning, Details and Working In Real Estate

Tripartite Agreement: Meaning, Details and Working In Real Estate, In an under-construction project, the tripartite agreement states the relevant details of a housing loan or leasing transaction.

The blog entails buyers investing in under-construction properties invariably have to sign tripartite agreements while entering into a contract. As there is an involvement of a financial institution in the process, there are a total of three parties in such an agreement, which gives it this name.

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What Is A Tripartite Agreement?

A tripartite agreement is a legal document that holds some terms and conditions of property deals. When a financial institution is also involved apart from the buyer and the seller in a property buying, then they are laid under a different legal document, which is legally known as a tripartite agreement.

A tripartite agreement has to be signed by all the three parties involved, as when a buyer opts for a home loan to purchase a house in an under-construction project.

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What Are The Key Details Mentioned In Tripartite Agreement?

A tripartite agreement means the role and responsibilities of all parties concerned apart from the basic information about them. It should contain the particulars of the property and include an annex of all the original property documents.

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Why Is The Tripartile Agreement Important?

Tripartite agreement is useful in assisting buyers that wish to acquire loans for buying properties against the planned purchase of the property. As till the time of possession, the home/apartment is still not in the name of the customer, thus, the developer is included within the agreement with the bank.

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How Do Tripartite Agreements Work?

Any developer who is building a housing society must enter into a written tripartite agreement with every buyer who has already purchased. Or, sometimes when the buyer is about to purchase a flat in the project.

As this agreement is a proof of clarification on the status of all the parties involved in real estate transactions and keeps a watchful eye on all documents. Furthermore, the tripartite agreements are relevantly stamped in respect to the state where the property is located.

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Details Mentioned In Tripartite Agreements

According to Bulchandani, tripartite agreements have to carry all the information mentioned below:

• Names of the parties to the agreement

• The objective of the agreement

• Rights and remedies of the parties

• Legal implications

• The borrower’s perspective

• The developer’s perspective

• Bank/lender’s perspective

• Agreed selling price

• Date of possession

• Stages and the progress details of construction

• Interest rate as applicable

• Equal monthly installment (EMI) details

• Agreed common area amenities

• Penalty details if the booking is cancelled

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Conclusion

This tripartite agreement should represent the developer or the seller stating that the property has a clear title. In addition to this, it should also mention that the developer has not entered into any new agreement for the sale property with any other party. The agreement should also contain the developer’s liabilities to construct the building as per only the approved plans and specifications sanctioned by the local authority.

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Be Caution While Signing a Tripartile Agreement

The terms and conditions mentioned in this agreement could be complex and therefore, might cause some difficulty in understanding the same. It is advisable that the home buyers seek the assistance of legal experts, to look into the document and make a sound investment. Not doing so might lead to complications in future, especially in case of a dispute, or projects delays.

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