Law Society Tripartite Deed Of Assignment

Tripartite Deed

What is a Tripartite Deed and when should I use one?
A Tripartite Deed is an enforceable agreement, predominately, between a former solicitor, a client and the new solicitor for any outstanding legal fees owed to the former solicitor. An impasse may occur where the former practitioner claims a lien on the client’s file for unpaid costs, while the new practitioner needs the file to continue proceedings or other work.

Rules 14 and 15 of the Conduct Rules provide for how, in the event of a termination of the retainer, a client's file is to be handed over to the new practitioner. The Law Society precedent Tripartite Deed is frequently used by practitioners to provide satisfactory security for the former practitioner's costs.
Practitioners should adapt the Deed to suit their own purposes as the Law Society does not warrant the effectiveness of the Deed in any particular matter.
 

The Law Society's Precedent Tripartite Deeds:

 

Reasonable security

As to whether the Deed provides satisfactory security for the previous practitioner’s costs, one should consider
Penbroke J’s judgment in Tyneside Property Management Pty Limited & Ors v Hammersmith Management Pty
Limited & Ors [2011] NSWSC 22:
“satisfactory security will mean something of monetary value which will ensure the satisfaction of the possessory lien: Bechara v Atie (supra) at [64].”

It Is All About the Finance

Funding

Construction loans are generally loans which are to be used to finance the construction of a building.

Typically, developers obtain a loan to assist with buying a development site on which they intend to develop. They will also seek either an extension of any current loan or an entirely new one to assist with the costs of the construction.

Usually, and commonly in today’s market, financiers set down various preconditions which must be satisfied prior to allowing monies to be drawn down on a construction loan.

Such preconditions can include:

  • a minimum number of presales,
  • evidence of a building contract with a reputable builder,
  • evidence of a current Home Owners Warranty Insurance Policy, and
  • a Builder Side Deed (also known as a Tripartite Deed), amongst other things.

The documents which set out the terms and conditions of loans of this nature are usually complex, particularly where there are intercompany and personal guarantees and various forms of security. In light of this, it is recommended that legal advice be obtained as to the terms of such loans and mortgages prior to entering into agreements which contain serious obligations and can have disastrous consequences for those who do not understand the terms they are entering into.

Tripartite Deeds

Builder Side Deeds, also commonly known as Tripartite Agreements, are agreements between the developer (or Principal), builder and financier which set out the parties’ rights and obligations with respect to the completion of building works and events of default, in particular by the Principal under its loan or under the building contract.

Where there is a loan agreement, the financier may require that the builder enter into a Builder Side Deed in which the builder allows the financier specific powers to step-in and cure rights where there is some default by the Principal.

 

 

There are numerous issues to consider in such agreements and the proper advice as to the terms of such agreements is highly recommended (and those terms negotiated if necessary) before they are entered into.

With all such documentation relating to loans and otherwise, where numerous terms and conditions exist and must be complied with, it is critical you obtain clear and impartial advice so that you can understand what is expected and so as to avoid common misunderstandings and pitfalls, which can be devastating, that usually arise from a failure to treat these documents with the attention they need.

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