You need to make sure that the title of the property sold by the developer is clear. Original documents relating to the property must be submitted to the bank when applying for a loan. In Bunga Daniel Babu v.M/s Sri Vasudeva Construction, the Indian Supreme Court recently found that a landowner who entered into a Memorandum of Understanding with a contractor for the development of his land by constructing a multi-storey building is considered a consumer within the meaning of Section 2(1)d of the Consumer Protection Act of 1986. If the property in question has a clear title and the price offered by the developer for the basic property is based on the market price, it is a good idea to enter into this agreement. This document must have the seller as a party with a clear title. In addition, it should mention that the same entity or property is not sold to another party. It is also important to add the developer`s liability for the construction of the building, in accordance with the sanctioned plans of the municipality. The conditions set out in these agreements can be complex and therefore difficult to understand. It is advisable that buyers seek the help of legal experts to review the document.
If this is not the case, this may lead to complications in the future, especially in the event of litigation or delay. Tripartite acts or agreements are agreements between the developer (or master), the owner and the financier (usually the bank) that define the rights and obligations of the parties with respect to the completion of construction work and the procedures for managing defaults in the context of a loan or under the construction contract. The advantage of a common development agreement is to reduce the risk, not to require primary financing for the acquisition of the land, to avoid part of stamp duty. The situation is somewhat different in the development of the tripartite agreement under industrial leasing. Three parties are involved, and they are the owners, the lender and the tenant. According to this agreement, if the owner of the building attempts to violate the unpaid clause of the real estate credit agreement, the bank, aka the lender, enters an active role to automatically become the new owner. With the change of ownership, the tenant must accept the new owner and the new owner has no right to reform the pre-defined clauses in the tripartite contract. It is the borrower`s duty to ensure that the loan is repaid at the same time as the principal and interest, in accordance with the payment plan. The agreement clearly states that if the borrower defaults on the loan repayment, the property will be transferred to the bank.