Tripartite Agreements- All You need to Know AboutSamar Javed29 January 2020
A tripartite agreement is a valid legal document that holds onto the responsibilities and obligations that the concerned parties have decided to follow while sealing a deal. This agreement also represents the much-needed terms and conditions that all the parties must follow while the deal is said to be on-process. In short, tripartite means and has the details related to a leasing transaction or housing loan that is been created representing an under-construction project. Keep reading to know more about this type of mutual obligation agreement between three parties and the details that are needed to acquire one as well.
What’s a Tri Party Agreement?
An agreement usually involves two parties, yet, in certain situations creating tripartite agreement becomes a must if at all the third party is in one way or another related to the on-going deal. If you are looking forward to buying land or property from a party who has leased it to a third party, then you must create a tri party agreement stating the name, power of the individual parties and other obligations that everyone must follow in one roof. Never belittle a situation where there are more than two parties involved to obtain the title of the property. Hire services from a reliable source to create a valid tripartite type of agreement.
List of circumstances where a tri party agreement shall turn useful:
Make it a point to create a Tri party agreement if at all you are facing any one of the below-mentioned situations.
- While selling a flat that comes under a registered society, it is a must to create a tripartite agreement that involves the buyer, society head members, and the seller.
- If at all a flat has been purchased directly from a licensed builder and no kind of resale information has been passed onto the society then a tripartite agreement must be made between the seller, buyer, and the builder.
- If at all the property that you are about to buy is under mortgages like a house loan or personal loan, then creating a tripartite type of agreement becomes necessary.
- As per law, creating a tripartite agreement is not a mandatory action, yet, for your safety and to avoid future conflicts you need to create one in the first place.
Real day Advantages of Creating a Tripartite Agreement:
- The third-party who has been indirectly related to the on-going deal between the buyer and the seller cannot make any kind of statements related to the transactions that are about to be made.
- This type of agreement also entails that no kind of due is payable for the third party by the seller.
- The financial institutions and banks shall easily lend housing loan and other types of loans after submitting the tripartite agreement with them
- The successors or legal heirs from the side of the third party can never challenge the transactions that were made between the buyer and seller.
How Tripartite Agreements do look like?
- The tripartite agreement acts as a liable document between all the involved three parties and shall be used to claim their existing part within the on-going transaction.
- The agreement must state the fact that the developer is likely to own the title part of the land or property
- It should also clearly state the fact that the developer in no way has entered or sold into any form of agreement with the consequent party
- This agreement makes the developer liable to develop and construct a building as per the approved norms of the local bodies
- The tri party agreement must mention all three perspectives involved with the on-going deal, which includes the lender, borrower, and the developer
- The tripartite agreement must clearly mention the date of possession, sale value and the exact type of progression made in terms of constructing the approved building map
- Existing EMI monthly installment details and the home loan interest details must be mentioned within the agreement.
- The type of penalty that needs to be followed if at all the third party goes beyond the norms or the buyer cancels the booking by stating various reasons.
Details Required while Creating a valid Tripartite Agreement?
- The party names involved in the agreement
- The main objective behind creating the tri party agreement
- The remedies and the rights of every other indulged party
- The perspective of the borrower
- The perspective of the developer
- The agreed sales price
- Original date of possession
- Interest rates as mentioned in the home loan agreement
- The current construction stage
- EMI (Easy Monthly Installment) details
- Penalty details for the borrower if at all the booking has been canceled from his/her side
- The agreed mutual amenities.
How does this agreement work?
The Tripartite agreement is more or less equal to a house agreement format and represents the property or land title of the seller or the developer. These agreements can be used against the third party if at all they have entered into a new agreement without getting consent from the seller and buyer. To say in an example, according to the Maharashtra Flat Ownership Act, every other information related to the property that is in its construction stage must be revealed to the buyer to avoid facing legal expenses in the future. The tripartite agreement must hold onto the accountabilities of the developer to develop and construct a building following the approved plans and the specifications that have been legally agreed by the local body authorities.
Alternate to a Tripartite Agreement:
If by any means the third party is not looking forward to joining as a party in the tri party agreement then it is a must to receive an NOC (No Objection Certificate) stating their stand with the on-going deal. This way, the name of the third party can be eliminated and the NOC can be submitted in the legal office bodies while transferring the title of a piece of land from the seller’s name to the buyer’s name. The No Objection Certificate must include particulars like the name of the third party, their designation involved in the deal and the reason behind signing for no-obligation.