All You Need To Know About Tripartite Agreements
In case a home buyer purchases a property taking a home loan, an agreement is signed among the buyer, seller and the financial institution. This legal document is known as a tripartite agreement, as three parties are involved in the process.
This document is of utmost important, especially if you are buying an under-construction property. While safeguarding the interests of the home buyers, the agreement also states that if the borrower defaults on the loan, the property will be transferred to the lender and the builder has to accept the new owner.
Why is the tripartite agreement important?
A tripartite agreement is a legal document that clearly states the obligations and responsibilities of all parties involved in the deal. It also elaborated the various terms and conditions that must be followed while carrying out the deal.
At the time of the creation of this documents, a buyer must ensure that the agreement must contain all the relevant information about the property and annexure for original documents. The tripartite agreement needs to be stamped in the state where the property is situated.
How tripartite agreement looks like?
The agreement should act as an instrument for all three parties, claiming their part in the real estate transaction. Other than this:
- The agreement should state that the developer is claiming to have clear title to the land.
- It should state that the developer has not sold or entered into any agreement with the other party.
- The agreement also makes developer liable to construct the building according to the approvals, specifications and map approved by local bodies.
- The agreement should mention perspective of all three parties- borrower, lender and the developer.
- A tripartite agreement should mention the sale value, date of possession, stages and progress of construction.
- This agreement should also have complete details on interest rate on home loan, monthly instalments (EMIs), common area amenities to be given by the developer.
- The agreement should also have penalty details if the booking is cancelled.