Legal Definition Tri-Party Agreement

A tri-party agree­ment is a legal doc­u­ment that out­lines the terms and con­di­tions of a three-way agree­ment between three par­ties. In the legal world, tri-party agree­ments are com­monly used in a vari­ety of dif­fer­ent con­texts, includ­ing real estate trans­ac­tions, con­struc­tion projects, and finan­cial transactions.

In the con­text of real estate trans­ac­tions, a tri-party agree­ment is often used when a buyer pur­chases a prop­erty from a seller who has an exist­ing mort­gage on the prop­erty. In this case, the buyer and seller would enter into a tri-party agree­ment with the lender, out­lin­ing the terms and con­di­tions of the trans­fer of own­er­ship and any nec­es­sary financ­ing arrangements.

Sim­i­larly, in the con­text of con­struc­tion projects, a tri-party agree­ment is often used to out­line the respon­si­bil­i­ties and oblig­a­tions of the owner of the prop­erty, the con­trac­tor per­form­ing the work, and the lender pro­vid­ing financ­ing for the project.

In the finan­cial world, tri-party agree­ments are com­monly used in secu­ri­ties lend­ing trans­ac­tions, where the bor­rower, the lender, and the cus­to­dial bank would enter into a tri-party agree­ment out­lin­ing the terms and con­di­tions of the trans­ac­tion, includ­ing the secu­ri­ties being lent, the col­lat­eral being pro­vided, and the fees and inter­est rates asso­ci­ated with the transaction.

The legal def­i­n­i­tion of a tri-party agree­ment can vary depend­ing on the spe­cific con­text in which it is being used. How­ever, in gen­eral, a tri-party agree­ment is a legal doc­u­ment that out­lines the terms and con­di­tions of a three-way agree­ment between three parties.

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