According to experts, tripartite agreements have been reached to help buyers acquire funds from banks against the proposed purchase of a home from a developer. Tripartite agreements define the different guarantees and contingencies between the three parties in the event of default. “By law, any developer who builds a housing company must enter into a tripartite written agreement with any buyer who has already purchased or will buy a home in the project,” explains Vijay Gupta, CMD, Orris Infrastructures. “This agreement clarifies the status of all parties involved in real estate transactions and keeps an eye on all documents,” he said. In the Indian real estate sector, a tripartite agreement is an agreement between three parties – The Buyer, The Bank and The Seller/Developer. The tripartite agreement lists the commitments made by the three parties. This agreement contains all the details of the mortgage for the house/apartment, the rights and commitments of all parties include the property specifications, the carpet area and all details regarding the loan/financing of the property, the date of ownership of the property and the details of the penalty clause. Tripartite agreements have been reached to help buyers acquire home loans against the proposed purchase of the property. As the house/apartment is not yet in the client`s name until the property, the owner is included in the contract with the bank. “Tripartite agreements have been reached to help buyers acquire home loans against the proposed purchase of the property.
As the house/apartment is not yet in the client`s name, the owner is included in the agreement with the bank,” said Rohan Bulchandani, co-founder and president of the Real Estate Management Institute™ (REMI) and Annet Group. Tripartite agreements are usually signed for the purchase of units in basic projects. A tripartite agreement means the role and responsibilities of all parties involved, with the exception of basic information about them. The tripartite agreement should represent the developer or seller by indicating that the property has a clear title. In addition, it should also be noted that the developer has not entered into a new agreement for sale ownership with another party. For example, the Maharashtra Ownership of Flats Act of 1963 requires full disclosure of all relevant information regarding the property acquired from the seller/developer to the buyer. The tripartite agreement should also include the developer`s commitments to build the building in accordance with approved plans and specifications approved by the local authority. In particular, tripartite mortgage contracts become necessary when money is lent for a property that has not yet been built or improved.
Agreements resolve potentially conflicting claims about the property if the borrower – usually the future owner – breaks down, or may even die during construction work. “In the leasing sector, tripartite agreements can be made between the lender, the owner/borrower and the tenant. As a general rule, these agreements stipulate that if the owner/borrower violates the non-payment clause of the loan agreement, the lender/lender becomes the new owner of the property. In addition, tenants must accept the mortgage lender as their new owner. The agreement also prevents the new owner from amending tenant clauses or provisions,” Bulchandani adds.