PandaTip: Simply put, a tripartite agreement is an agreement between three parties. You could have a tripartite confidentiality agreement, a tripartite non-competition agreement – you call it. However, tripartite agreements are most common when banks are involved in a transaction. That is why we have taken a little free hand and created here a model for such a tripartite agreement. In this tripartite agreement, the bank acts as guarantor of the contractor and assumes certain obligations regarding the transaction between the contractor and the client. We have no doubt that this tripartite agreement will require some additional adjustments for your specific objective, as there are an infinite number of possibilities. Be sure to get the support of your legal counsel. According to Mr. Bulchandani, tripartite agreements must contain all the information mentioned below: “In the leasing sector, tripartite agreements can be concluded between the lender, the landlord/borrower and the tenant. As a general rule, these agreements stipulate that if the owner/borrower violates the non-payment clause of the loan agreement, the lender/lender becomes the new owner of the property. In addition, tenants must accept the mortgage lender as their new owner. The agreement also prevents the new owner from amending tenant clauses or provisions,” Bulchandani adds. Tripartite leases are now often used by developers in new blocks.
It is now more common for tenants, since they are tenants in the block, to have a share or affiliation with the management company, better known as “Resident Management Companies” or “RMC`s”. The contractor and the bank agree to notify each other within [numbers] of the notification of acts or omissions of which the party is informed, which are contrary to the tripartite agreement or which may be fraudulent or unauthorized. In practice, RMC`s is considered the vehicle by which the developer/renter “discharges” unprofitable commitments to lose the lease to another party. Tripartite agreements should include information on real estate and contain an appendix to all initial ownership documents. Moreover, very few tenants realize, even today, that RMC`s are duly incorporated companies and the management of an RMC is not at all a matter of law. The RMC must be kept in accordance with the actions of companies, otherwise it risks being placed on the register of companies. The consequences of this event can be catastrophic insofar as, depending on the wording of the lease, no one could be responsible for the management and maintenance of the building. This could mean that the building, if left to the rack and/or perhaps to the RMC administrators, will be personally held responsible for these management violations. These efforts culminated in the passage of landlords and tenants` laws in 1985 and 1987, followed by the leasehold Act, the Housing and Urban Development Act of 1993 and the Commonhold and Leasehold Reform Act of 2002, all of which sought to compensate for the power imbalance between landlord and tenant.
In the context of tripartite leases, management companies are once limited companies whose main objective is to manage and preserve the common areas (entrances, elevators, car parks, gardens and the main structure of the building itself) for the general benefit of the tenants. The full responsibility of each management company is set out in its memorandum and in the statutes and contained in the tripartite leases themselves.