A tri-party agreement is a deal between three parties. The term can apply to any deal but is commonly used in the mortgage market. ... In tripartite, the three parties are the buyer (or borrower of the loan), the lender and the company building the property.

What is the purpose of tripartite agreement?

Tripartite agreements have been established to assist buyers with acquiring loans for properties against the planned purchase of the property. Since the home/apartment is still not in the name of the customer until possession, the builder is included within the agreement with the bank.

When can a tri-party agreement be used?

Tri-party mortgage agreements are commonly used during property construction, when buyers borrow financing from a lender to secure an agreement with the builder. The builder is included in the loan agreement as the buyer does not own the property until the completion of the sale when they take possession.