Buying an apartment is a difficult task and people often get overwhelmed by just thinking about all the issues they will have to face before they can finally move into their new place. When buying a house, finance plays the most important role. Of course, any place with your family is home, but when the roof over your head is yours too, the feeling is brilliant! This is why people are always recommended to buy a 2BHK or 3BHK apartment rather than renting it. While most of the agreements when buying a new residential project in Kolkata require two parties, namely the buyer and seller, to sign the agreement papers, there are times when a third is included as well. The third-party becomes a part of the process when you apply for a home loan. The third party in most cases is the bank. This agreement between the three parties is known as a Tripartite Apartment. It is necessary to be signed by the buyer when he/she is planning on buying a project which is still undergoing construction. These types of agreements are not necessary but are recommended only to avoid future conflicts. Sometimes, the third party can also be the society in case the society is an already registered one. This agreement is one of the most important and useful things in the process of property buying.
What Does this Agreement Say?
This agreement was brought to existence to make it easy for buyers to purchase the house after applying for their home loan. Not only does this check the financial credibility of the buyers but also checks the legitimacy of the builders and developers. All the documents presented from both parties are thoroughly cross-examined by the bank to make sure there is no room for any illegal or fraud business. Other important information such as the final sale price, agreed on common area amenities, date of possession, Equal monthly instalment (EMI) details, interest rate, penalty details if the booking is cancelled, and payment schedule for the loan, etc are all mentioned in the agreement. This in turn also appeases the legal process known as Subordination. It clearly specifies when by whom and how the property is transferred. Once the agreement is signed, the builder cannot enter into any new agreement with a new buyer. It is like a legal seal. The builders’ liabilities and permissions from the local authorities to build the particular property is also presented before the bank during this agreement. When selling a flat-based in a registered society, a tripartite agreement between buyer, seller, and society becomes necessary to prove that the society has no problem with the new property buyer. Most people who have booked their flats in Orchard 126 have done it after signing their tripartite agreement.
How and When are they Useful?
- When selling the property, later on, a tripartite agreement becomes a must especially if the property comes with a society that is registered.
- It comprises all the obligations and responsibilities of all parties involved in the deal so nobody can back off from their words later.
- The successors or other legal heirs of the buyer or the seller cannot make changes in the agreement later on. What is sealed, is sealed.
- It becomes a lot easier for people to get their home loans sanctioned from the banks because a tripartite agreement proves the authenticity of the buyer as well as the seller.
- Total transparency is maintained.
What Does this Agreement Say?
- It states that the developer or builder has a clear title to the land/ property.
- It specified that the developer is only to construct the property according to the permissions granted by the local bodies and the existing mappings.
- All the perspectives of three parties are to be mentioned in the agreement.
- The agreement should mention that the builder shall not show the property or enter into any agreement for the same property with anyone else.
- The sale value, date of possession, stages, and progress of construction should all be precisely mentioned in the agreement.
- The interest rate on roan, the number of instalments to be paid and common area amenities need to be present in the papers.
- It shall also declare that there is no due payable by the seller to the third party.
Is it Important?
Yes. Tripartite agreements are definitely important if you are planning to purchase a house on loan. They are legal documents that specify the three parties, that is – the buyer, seller, and the bank of their roles and responsibilities. They also make sure that all these three parties are aware of their power as well as obligations. This agreement needs to be stamped in the state where the property is located. If by any unavoidable reason, the third party cannot be made a part of the agreement then the transaction shall be moved forward with the help of a no-objection certificate which will act as a green signal. The no-objection certificate should consist of name and particulars of seller, name, and particulars of buyers, the designation of the person giving NOC, etc.
What are the Essential Documents needed for Tripartite Agreement?
These are all the documents you need for your tripartite agreement to happen smoothly:
- The parties to the agreement
- The objective of the agreement
- Rights and remedies of the parties
- Legal mechanics
- The borrower’s perspective
- The developer’s perspective
- Bank/lender’s perspective
- Agreed selling price
- Date of possession
- Stages and the progress details of construction
- Interest rate as applicable
- Equal monthly instalment (EMI) details
- Agreed common area amenities
- Penalty details if the booking is cancelled
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