The Tripartite Agreement: Who Owes What to Whom

Buying a home that has not been built yet creates a problem for a lender that does not exist when you buy a finished one. The lender is releasing money against a property it cannot take security over, because the property is not yours yet and in a physical sense is not there yet. Its recourse for the whole construction period runs through the developer — and a two-party loan agreement gives it no hold over the developer at all.

The tripartite agreement is the fix. It is a short document, it is signed at the disbursement desk in the middle of a stack of other paper, and almost nobody reads it. The clauses that matter to a buyer are not the ones about interest; they are the ones about what happens if you want out, if the developer wants you out, or if the building is late.

Why a two-party loan needs a three-party agreement

On a ready home the sequence is clean: sale deed, registration, property in your name, security to the lender. On an under-construction home the property stays with the developer until the conveyance at handover, while the money moves from the lender to the developer in stages over the construction period, against milestones.

So for two or three years the lender is exposed to a party it has no contract with. The tripartite agreement closes that gap by making the developer a signatory to undertakings it would otherwise owe to nobody but you.

Who the parties are, and what each undertakes

Templates differ by lender, but the architecture is consistent.

• The buyer confirms the booking and the unit, acknowledges that disbursements go to the developer and not to them, and agrees that the rights in the allotment are charged to the lender as security until the loan is repaid.
• The lender undertakes to release the sanctioned amount in tranches against the developer's demands and its own verification of the construction stage.
• The developer takes on the substantive obligations: to note the lender's charge in its records, not to cancel or re-allot the unit without informing the lender, not to accept a transfer of the unit to anyone else without the lender's no-objection, to hand over the original documents to the lender at conveyance, and to route any refund arising on cancellation to the lender rather than to the buyer.

Read the developer's list again. Every item on it is about control of the unit. That is what the lender is buying with a three-party signature.

The clauses on cancellation, substitution and buyback

Three clause families do most of the work, and they are worth finding in the copy in front of you before you sign it.

Cancellation and refund routing. If the booking is cancelled — by you, or by the developer for non-payment — the refund does not come to you. It goes to the lender, which appropriates its outstanding dues first. What reaches you is the residue, after the developer's own cancellation deductions and after the lender's principal, accrued interest and charges. It is entirely possible for that residue to be small, and buyers who cancel early are frequently surprised by the arithmetic.

Substitution. The developer typically agrees not to substitute another buyer into the unit, or to permit a transfer of the allotment, without the lender's written no-objection. This protects the lender, and it also means that if you want to sell your allotment before possession you have two consents to obtain, not one.

Buyback or repurchase. Some templates include an undertaking by the developer to repurchase the unit, or to refund the amounts received, if the loan turns bad or if title to the unit fails. Where such a clause exists it is a lender-facing protection, not a buyer-facing one — it does not entitle you to hand the unit back. Read it as information about the lender's confidence in the project, not as a put option.

How it sits alongside the agreement for sale

The tripartite agreement does not replace, override or amend the agreement for sale between you and the developer. Under section 13(1) of the Real Estate (Regulation and Development) Act, 2016, a promoter may not accept more than ten per cent of the cost of the apartment, plot or building as an advance or application fee without first entering into a written agreement for sale and registering it. That registered agreement is the instrument that governs what you are buying, at what price, with what specifications, and by when.

Where the two documents touch, the agreement for sale is the one with your rights in it. The tripartite agreement is a financing document layered on top. If a clause in the tripartite copy appears to cut across a right you have under the registered agreement — a possession commitment, a payment schedule, a specification — raise it before signing rather than after, because you will be signing both.

Where a delay lands

This is the question buyers ask most and the one the tripartite agreement answers least helpfully: if the building is late, who carries it?

The financing answer is unforgiving. Interest accrues on the amount already disbursed regardless of what is happening on site. A delay therefore extends the period during which you are servicing a partly-drawn loan without a home to live in — and if you are paying rent at the same time, that is the whole cost of the delay, in cash, every month.

The remedy for delay is not in the tripartite agreement. It is in the agreement for sale and in the Act — section 18 of the Real Estate (Regulation and Development) Act, 2016 deals with the promoter's liability where possession is not given by the date specified in the agreement, including the allottee's option to withdraw and be refunded with interest, or to continue and be paid interest for every month of delay. That is a claim against the developer, and it runs in parallel with the loan rather than pausing it.

Approved project financing, and what it does not mean

Lenders maintain lists of projects they have appraised centrally — title examined, approvals seen, the developer's standing assessed — so that individual loan files against those projects do not repeat the work. In the trade this is usually called approved project financing, and a project on the list is said to carry that lender's approval number.

It is genuinely useful to a buyer. A file against an appraised project moves faster, the legal opinion is quicker, and the tripartite agreement is likely to be the lender's standard form rather than a negotiated one. Ask which lenders have appraised the project you are buying in; the developer will normally tell you, and more than one name on that list is a meaningful signal.

What it is not is a certification of the project. A lender's appraisal is conducted for the lender's own credit purposes, it is a point-in-time view, and it can be withdrawn. It does not replace your own advocate's opinion on title, it says nothing about construction quality or delivery timelines, and it is not a substitute for checking the project's registration and approvals yourself. Treat it as one more party having looked, not as the answer.

The questions to ask before you sign

• Is the refund on cancellation routed to the lender? What is deducted before the balance reaches me?
• Whose no-objection do I need if I want to transfer the allotment before possession, and what does that process cost?
• Does this copy contain a buyback or repurchase undertaking, and in whose favour is it?
• At conveyance, who receives the original documents, and what will I be given in acknowledgement?
• Does anything in this document contradict the registered agreement for sale? If so, which prevails?

What to keep, and why

Keep a copy carrying all three signatures — not the unsigned draft you were emailed, and not a copy signed by two parties with the third to follow. The document only does its work as a three-party instrument, and the copy in your file is the one you will produce years later at closure, when you are asking a lender to release originals and a developer to confirm no dues.

Which registrations a project actually holds, transcribed from the certificates, are on the RERA page. The document sequence a purchase runs through is set out in the buyer guide, and the terms above are defined in the property glossary.