Tripartite Agreement for Home Loan

Overview

When a home loan is for an under-construction flat or a property bought directly from a builder, the bank often does not hand the money to you. It pays the builder, and before it does, it wants a written arrangement between all three parties. That document is the tripartite agreement, and the buyer, the builder or seller, and the lender all sign it.

Its main job is to lay out how the loan will be disbursed, usually in stages linked to construction progress, and to record that the property is being mortgaged to the bank as security. It also commonly covers what happens if the buyer defaults or the project stalls, the builder's duty to hand over documents and a no-objection to the mortgage, and who bears the loss if the allotment is cancelled. Banks usually have their own format, so you may not get to negotiate much, but reading it carefully still matters.

People are often surprised to find they signed away more than they realised, for instance a clause letting the bank deal directly with the builder on cancellation or refund. We review the bank's draft, explain it in simple terms and point out anything unusual. Where the builder's side is drafting, we prepare a version that matches the loan sanction letter and the builder-buyer agreement, so the three documents do not contradict one another, which is a common reason disbursement gets held up.