Buying an Apartment and the Sale Agreement

A transaction between two private individuals, with no safety net

In a second-hand transaction there is no bank guarantee, no Sale (Apartments) Law and no supervisory body. What protects you is what was checked before signing and what was written into the contract. That is true for the buyer, and no less true for a seller who wants to leave the transaction with no loose ends.

Most problems stem not from fraud but from gaps: between what is registered and what actually exists, between what was promised orally and what was put in writing, and between the payment schedule and the moment the rights actually pass.

What is checked before signing

• The seller's rights: an up-to-date Land Registry extract, a confirmation of rights from the Israel Land Authority or the housing company, and a match between the registered owner and the person actually signing.
• Charges and attachments: mortgages, attachments, cautionary notes in favour of third parties, and insolvency proceedings.
• The planning and physical position: the building file, the building permits, unauthorised construction and unapproved uses.
• The common property: parking spaces, storerooms, roofs or balconies attached to the apartment, and what is recorded in the condominium bylaws.
• Taxation: purchase tax, betterment tax and betterment levy, including the question of a sole residential apartment and possible exemptions.
• Ongoing charges: municipal rates (arnona), house committee fees and utility bills, and who bears them until delivery.

The sale agreement: what determines the outcome

A good sale agreement is not one that assumes everything will go smoothly, but one that governs what happens when something goes wrong. These are the clauses that decide the matter in practice:

• Payment schedule against securities: every payment in return for something. The first payment against registration of a cautionary note, the interim payments against the discharge of charges, and the balance against delivery of possession and of the documents for the transfer of rights.
• Discharge of the seller's mortgage: a letter of intent, payment directly to the bank, and a precise mechanism for obtaining the deed of discharge.
• Trust: a sum held in trust until the tax certificates are produced and the registration is completed, so that you are not left without leverage.
• Delivery date and condition of the apartment: what remains in the apartment, eviction of tenants, and what counts as proper delivery.
• Agreed compensation and reciprocity: a reasonable amount, a defined grace period, and symmetry between the parties.
• Conformity with the actual position: the seller's representations on unauthorised construction, on known defects and on third-party rights.

Taxation and reporting on time

Purchase tax, betterment tax and betterment levy are part of the true price of the transaction, and the significant decisions about them are made before signing, not after. Section 73 of the Real Estate Taxation (Betterment and Acquisition) Law, 5723-1963, requires the seller and the buyer to file a declaration with the Real Estate Taxation Office within 30 days of the date of the transaction.

What comes up again and again with buyers and sellers

• Memorandum of understanding: a short document signed in a moment of enthusiasm may bind you to terms you did not want, and may even give rise to a taxable event.
• Relying on oral promises: what is not written in the contract does not exist.
• An unsecured payment: every transfer of money should be made against appropriate security.
• Ignoring unauthorised construction: it affects the mortgage, the value of the property and exposure to demands from the local planning committee.
• A linked transaction: selling an existing apartment and buying a replacement at the same time requires precise coordination of dates and of taxation.

Contact us before you sign

A short conversation before signing is worth far more than dealing with a problem afterwards. We will be glad to hear about the transaction and explain what is required in your case.