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Everything You Need To Know About Tripartite Agreement

Posted by Sasi Kumar on January 5, 2023

Tripartite Agreement

With so many people choosing to invest in commercial and residential properties, India’s real estate market has seen a boom. To everyone’s surprise, there is still a huge demand for real estate in urban India despite what industry experts had predicted the pandemic might do. The term “tripartite agreement” will come up if you’re first-time buyers who want to purchase a home using financial aid or a home loan. We delve deeply into the information that every buyer of real estate needs to know in this blog, especially if you’re buying a property that is still being built and wants to use a home loan as financing.


What Is The Meaning Of a Tri Party Agreement ?

In simple words, ” a business agreement involving three different parties is known as a tri-party agreement”. In general, every agreement has two parties, but there are some situations where a tripartite agreement is needed. The main contract between the buyer, bank, and seller is known as a tripartite agreement. Tripartite agreements have been put in place to assist buyers with obtaining loans for properties against a planned purchase of a property, so they are a crucial document when a buyer prefers a home loan to buy a house in an under-construction project.


When Does Tri Party Agreement Work

  • A tri-party agreement may be used in several different situations.
  • It becomes necessary to create a tripartite agreement between the seller, buyer, and developer when a property is being sold and the society is registered.
  • A three-party agreement between a builder, buyer, and seller would be very useful if a property has been purchased from a builder but no society has been established during the resale.
  • A tripartite agreement is extremely useful for establishing legal obligations in cases of encroachment on property, such as a home, farm, land, etc.
  • When a registered society has given consent to sell and buy and has no objections to the transfer of the flat and the resulting change in ownership, you will find a use for a tri-party agreement for the sale of property format.
  • If a builder has been added as a third party and that party is now responsible for creating a new society, a new buyer, or an apartment, you will also find a use for a tri-party agreement for a third-party payment format.
  • The property owner, the architect or designer, and the building contractor may all be parties to tri-party agreements in some circumstances. In essence, such agreements are “no-fault” agreements wherein each party acknowledges responsibility for correcting any errors or negligence of their own, and waives any claim against the other parties for any errors or omissions made in good faith. They frequently specify when and where regular meetings between the parties will take place as well as a thorough quality plan to prevent errors and delays.


The Tripartite Agreement: Why Is It Important?

A tripartite agreement is a formal document that states the rights and obligations of each party to the bargain. Additionally, it listed several guidelines that must be followed when carrying out the agreement. When this document is created, the buyer must ensure that it includes all pertinent information about the property and attachments to the relevant documentation. The state in which the property is located must stamp the tripartite agreement.


Advantages of Making A Tri Party Agreement

The expansion of businesses into the world market has depended heavily on agreements with third parties and the relationships that follow, but this expansion has its challenges. While these complexities have advantages that can raise a company’s value, they also carry risks that could reduce the relationship’s value or lead to unintended issues.


  • A tripartite agreement will aid in the official legal checks needed when investing in real estate, just as it does when applying for mortgages.
  • The bank investigates any illegality using the documents submitted by both the buyer and the seller to the bank.
  • All details of the home-buying deal, such as the sale price and the EMIs to be paid, are included in the tripartite agreement for a home loan. the tax rate at which the home loan is also taken, any additional fees that the purchaser will be required to pay if the reservation for the property unit is canceled, etc.
  • The developer won’t proceed with signing an agreement with a new buyer without this important legal document.
  • As a result, fraudulent practices are once more reduced. The third-party who is indirectly involved in the agreement and cannot claim ignorance of such a transaction is not permitted.
  • The transaction is not susceptible to challenge by the third party’s legal heirs or successors.
  • As soon as a bank or other financial institution is confident in the transaction’s legitimacy, they are all ready to give the loan priority.
  • An official legal document known as a tripartite agreement states the duties and obligations of each party to the bargain. It also contains several rules and regulations that must be adhered to when the agreement is being executed.
  • When creating this document, the buyer must make sure it contains all pertinent details regarding the property and attachments to the original documents. In the state where the property is located, the tripartite agreement must also be stamped.


What Are The Details To Be Mentioned In The Tri Party Agreement

Names of the contract’s parties

The tri-party agreement’s primary goal

Parties’ rights and available remedies

Legal repercussions

The borrower’s viewpoint

The viewpoint of the developer

A bank’s or lender’s viewpoint

Agreed-upon asking price

When it was possessed

Rate of interest, if applicable

Details of the Equal Monthly Installment

Agreeable amenities in public spaces



It will be advantageous for you to enter into a tripartite agreement if you are planning to use a housing loan to buy any under-construction property. The builder/developer is made a party to the agreement because you won’t become the property’s owner while it is still in the development stage. These agreements are especially helpful when loans are made for properties that are still being built because they prevent future disputes from arising from competing claims, such as if the buyer defaults or passes away during construction.


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