Tri-Party Agreement

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DEFINITION of 'Tri-Party Agreement'

A business agreement between three separate parties. In the mortgage industry, a contract involving the buyer, the primary lender plus a construction lender. This type of contract is commonly used to secure bridge loans for the construction of a home or other real estate.

INVESTOPEDIA EXPLAINS 'Tri-Party Agreement'

Tri-party agreements extend credit for construction to the buyer from the construction provider. The provider in turn holds the property as collateral. The primary lender will then pay off the construction loan and assume full liability for the loan upon completion of the construction.

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