Generally, all agreements have two parties but there are some occasions in which a tripartite agreement becomes necessary. A tripartite agreement is the principal legal document involving the buyer, bank, and seller. It is an essential document when a buyer prefers a home loan to buy a house in an under-construction project. “Tripartite agreements have been placed to support buyers with obtaining loans for properties against a planned purchase of a property. For example ‘A’ promises to ‘B’ to sell his land for Rs 60,00,000 and ‘B’ accepts to buy for the said amount taking a home loan. Here Bank has become the 3rd party and ‘A’ ‘B’ and ‘C’ agreed. This document is extremely important, especially if you are buying an under-construction property. Protecting the interests of home buyers, the agreement also affirms that if the borrower defaults on the loan, the property will be transferred to the lender and the builder must accept the new owner.
Tripartite agreements have been established to help buyers with obtaining finance from banks against a plan to buy a home from a developer. The agreement clarifies the status of all parties involved in real estate transactions and monitors all documents. It lists the rights and remedies from the borrower, lender, and builder. It details the stages or phases of construction, the final sale price, agreed on common area amenities, date of possession, Equal monthly installment (EMI) details, interest rate, penalty details if the booking is canceled, and payment schedule for the loan. It also specifies the legal process known as subordination, which defines to whom, how, and when various agreements in the property are transferred between the parties. This should indicate to the developer or seller that the property has a clear title. Besides, it should also be mentioned that the developer has not entered into any new agreement for the sale property with any other party. The tripartite agreement should include the developer’s liabilities to construct the building according to plans and specifications approved by the local authority.
A tripartite agreement is a legal document that asserts the obligations and responsibilities of all parties included in the deal. It also decked on various terms and conditions that must be followed while executing the deal.
At the time of the making of this document, a buyer must assure that the agreement must contain all important information about the property and attachment to the original documents. The tripartite agreement needs to be stamped in the state where the property is located.
In some cases, tripartite agreements may cover the property owner, architect or designer, and the building contractor. Such agreements are “no-fault” arrangements, in which all parties agree to measure their own mistakes or negligence, not to hold other parties liable for any harmony-omissions or errors.
The third-party who is indirectly related to the agreement can’t take the stand that he is unaware of any such transaction.
The legal heirs and successors etc. of the third party also can’t challenge the said transaction.
Banks and other financial institutions are always ready for loan preferment when they are convinced about the genuineness of the transaction.
It also implies that there is no arrear payable by the seller to the third party.
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