Very often, when we decide to follow our dreams and take the leap to buy a home, we decide to invest in an under-construction property. An under construction property can be favourable for numerous reasons. Maybe you will be able to purchase it at a good market value early on (and wish to cash in or the property appreciation rate) or pre-booking a home gives you the privilege of a great deal from the builder. No matter the reason, when you buy an under construction property you have to sign a tripartite agreement.
A tripartite agreement is a type of contract that you and the builder sign when you buy an under construction property. It is very much part of the process when you pre-book a home.
In this article we will be talking about what a tripartite agreement is, how it benefits you and what purpose it serves.
To start with, a tripartite agreement is called so because it involves three parties. The home buyer, the builder and the financial institution that provides a loan for the property. A tripartite agreement is a necessary step when you buy and under construction property. It is necessary when you take a home loan from a financial institution when you buy a home.
The main reason for a tripartite agreement to be signed is because the home buyer is not legally the owner of property, until the property is ready for possession. After the property has been constructed and sanctioned, only then is the deed of ownership passed on the home buyer.
In the case of a tripartite agreement, the deed for the loan for the home buyer also includes the builder. A tripartite agreement clearly states that if the home buyer is unable to repay back the loan for the property, the ownership of the property is transferred to the financial institution or the mortgagor. In the case of a tripartite agreement, it protects the interest of all parties that are involved in the home buying process and clarifies their status.
Here’s a list of all the information that a tripartite agreement must contain:
There are numerous advantages that are associated with making a tripartite agreement when buying a home. It allows the bank to do a thorough legal check of the property before it is sold by the builder. This protects the rights of the home buyer. This also ensures that the legal duties of the developer are committed to, hence benefitting the home buyer.
The tripartite is an important and binding legal document that protects the interest of all parties involved in the transaction of buying and selling a home. A tripartite agreement ensures that there are no fraudulent practices involved when buying the home.
A tripartite agreement is a legal document and hence may contain a lot of legal terms and jargon. These terms may be difficult to understand in full and it is strongly recommended that the buyer takes the assistance of a legal expert when signing such an agreement. The reason for having legal inputs from a lawyer or professional when signing a tripartite agreement is that it clarifies the legal obligations of the builder and homebuyer who are going into contract with the financial institution. Before signing any agreement, be sure to read the fine print and commitments it entails carefully, so that there are no misunderstandings or complications in the future especially in the case of the construction being stalled or there is a delay or dispute in the property.
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