A Tri-Party or Tripartite Agreement is an agreement signed between three parties. In real estate, this agreement is signed between a buyer, developer and lender (banks) when the buyer buys an under-construction property by taking a loan. Such an agreement helps secure bridge loans for the construction of a real estate project.

The tripartite agreement clarifies the position of each of the three parties with respect to the property transaction. Usually, the agreement states that if the borrower breaks the non-payment clause, then the lender would become the owner of the said property.

When entering into a tripartite agreement, a home-buyer must make sure that the agreement specifically mentions the following details:

• The parties involved in the agreement
• The objective of the agreement
• Rights of all parties, as accorded by the agreement
• The borrower's perspective
• The developer's perspective
• Sale price
• EMI details
• Date of possession
• The interest rate, as decided

The agreement must also clearly state that the developer claims a clear land title and that he has not sold or entered into an agreement with any other party. After signing the agreement, the developer becomes responsible for constructing the project in accordance with the required approvals.

While it is important to read the entire agreement thoroughly, given below are some commonly found clauses that one must pay special attention to.

• Tripartite agreement is usually part of a construction-linked payment plan. But, according to the agreement, irrespective of the stage of construction or delay in construction, the borrower is liable to pay regular EMIs to the bank, as mentioned in the agreement.
• In case there is a delay in the disbursement of money by the bank or a delay in paying the EMI, it will be treated as a default of payment by the borrower, and he shall be liable to pay penalty to the builder.
• One of the clauses of a tripartite agreement is that the builder shall not hand over the actual and physical possession of the property in question before the execution and registration of the deed. The original sale deed has to be submitted to the bank by the builder to be kept as security for the loan.