TRIPARTITE AGREEMENTS IN REAL ESTATE MATTERS

HOW FAR CONSUMER IS PROTECTED

                                             During the last decade, builders have marketed with the customers with a new attractive idea and offer –enter into tripartite agreement between the buyer, seller and the bank for loan. The scheme  entitles the buyer of flat/house/ to get loan for any huge amount of around twenty lacs  to be repaid in installments spread over for as many as twenty years. The attraction for the customer is that he is not to pay any installment till the construction is complete. Builder says-‘Dear buyer, you need not worry for payment of installments, I shall pay all till you are given possession of your flat. You only have to pay balance installments when construction is complete .Just relax, take loan and wait for your sweet home’

There is absolutely no betrayal from promise .Bank advances the entire amount, say twenty lacs in one go straight to the builder. Builder gets entire amount needed for construction from all allottees ,starts his project spending no single money from his pocket .On the other hand ,buyers has parted with entire construction cost , taken on loan in one go where  as per the scheme ,payment needs to be made on construction based scheduling of payment. Now builder pays installments of interest on the loan taken by the buyer till the construction is over and during the course, attracts more buyers, books more flats as the construction proceeds. He loses nothing but installments to be paid start from the day one in a manner that huge amount of interest is paid in early installments and principal amount at later stage. With the result, when construction is over, possession is given, he is left with almost entire principal amount yet to be paid .he is under loan for ten –fifteen forth coming years, Builder has paid only interest till then. In other words, he has used your money and paid interest to the bank

There are in between situations when buyer is shocked-

·         When construction does not start due to any reason, (non-approvals from authorities, short of funds) builder does not pay installment of interest to bank and bank asks you to pay the installment.-you really do not know you have agreed the terms

·         In case bank is to pay loan to the builder as per construction based scheduling and when construction does not start, bank stops release of payments further, builder threatens to cancel the booking due to nonpayment –you might have agreed this clause too. Builder may give hundred reasons for non start of construction. You may go on writing with no response.

·         Even you have not agreed any such adverse terms but the fact remains-you have applied for loan, loan is sanctioned, payment released, installments are to be paid either by buyer or by the builder. Bank has to recover the loan and failure on the part of any one, flat is under mortgage to bank. Buyer is barred to get possession

           These are the cases coming up before the consumer courts. If everything goes well, it is good planning for getting home in the heart of city but if it fails, consumer must understand the consequences of such agreements.

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