The Parties

• A tri-party agreement involves a real estate developer or homeowner, who is considered the borrower, a construction lender who finances the construction work and a permanent lender that assumes the mortgage after construction is completed.
  
  

The Construction Phase

• Initially in a tri-party agreement, it is the construction lender who holds the mortgage on the borrower's property. The construction lender is also responsible for the construction work on the borrower's property.
  
  

The Mortgage Transfer

• Upon completion of the project -- construction or otherwise -- the construction lender transfers the mortgage over to the permanent lender who continues to collect money from the borrower for the life of the mortgage.