What is a tripartite agreement and why is it important when buying a property "on the green"?

Quite a few people buy a property "greenfield" for investment purposes - when the building is still under construction and when construction progresses, they sell it for a profit. It is at this point that the key question arises: How can the new buyer be protected in their relationship with the investor?

The answer is one – tripartite agreement.

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What is a tripartite agreement?

This is a contract concluded between:

• The new buyer;
• The Seller (the original buyer under the preliminary contract);
• The investor (builder).

Through it, the new buyer replaces the seller in his relationship with the investor, on the basis of Article 102 of the Obligations and Contracts Act (OCA).

In other words, the new buyer enters into rights and obligations under the preliminary contract in the place of the seller.

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What does Article 102 of the Civil Code regulate?

Article 102 of the Labor Code regulates the so-called. debt substitution – the debtor can be replaced by another only with the consent of the creditor.

In the context of new construction, this means:

• the original buyer cannot simply „transfer“ the contract to you;
• the investor must explicitly consent;
• without this consent, the substitution has no legal effect.

Therefore, the tripartite agreement is the mandatory instrument that makes the substitution valid and protected.

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Why is the tripartite agreement important?

All rights and obligations of the seller are obtained

The new buyer fully takes the place of the original buyer towards the investor, both in terms of payments and deadlines and penalties.

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Penalties may be claimed for delays.

If there is a delay in putting the building into operation (Act 16), the new buyer has the right to claim the penalties agreed in the preliminary contract between the investor and the first buyer.

Without a tripartite agreement, this right could be challenged.

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The bank almost always requires it

When purchasing with a bank loan, the lending bank will almost certainly require a signed tripartite agreement if the property is still at the preliminary contract stage.

For the bank, this is a guarantee that:

• there is a legal entry into the contract;
• payments are clearly regulated;
• there is no risk of double claims.

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Protects against re-claiming of amounts already paid

The tripartite agreement establishes:

• what amounts were paid by the original buyer;
• what amounts remain due;
• to whom payments should be made.

This is a guarantee that the investor will not re-claim contributions already paid.

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When is it especially important?

• When purchasing a home under construction from the first owner;
• When reselling "green";
• In case of bank financing;
• When the building does not yet have Act 16;
• When payments are made in stages.

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Are there any disadvantages?

While it protects the buyer, a tripartite agreement can lead to:

• delay of the transaction (waiting for investor consent);
• additional costs for legal services;
• refusal by the investor to accept the new buyer;
• need for negotiations on the clauses.

However, the lack of a tripartite agreement carries a significantly greater risk.

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Conclusion

The tripartite agreement is key document when purchasing a property under construction from the first owner. It provides legal certainty, protection against delays and clarity regarding payments already made.

In greenfield transactions, this is not a formality - it is your legal protection.

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