A real estate purchase in Israel represents a significant investment, often fraught with complex bureaucratic procedures, particularly for overseas buyers who are unfamiliar with the complex financial, taxation and legal processes involved. These may be very different from other countries, which is why only a specialized property lawyer is qualified to advise you.
Below are some of the crucial points to bear in mind as you begin your search for a residential property in Israel.
1. Title deeds: In Israel, the apartment title may only be registered under the owner’s name in the Tabu (land registry) when the building’s process of construction is certified as complete, which also includes the division of said building into “lots”, with each apartment being registered as a separate unit in legal record. Prior to that time, there are a range of legal formulae and stages, so it is crucial to ascertain and guarantee that it will be possible to transfer and register full title of ownership in your own name once all the procedures are in place.
2. Surveyor’s report: Generally speaking, in Israel, a property is sold “as is”, which means that the contract of sale stipulates that the buyer has viewed it and deemed it suitable “as is”. Moreover, the party selling it is under no obligation to produce a surveyor’s report and it is entirely up to the buyer to conduct an inspection, if desired, this being entirely at his or her own expense.
3. Ancillary costs: You should be aware that the stated price is always “net to the vendor”. When purchasing an apartment in Israel, one should allow add-ons, including the agent’s commission, any work to be undertaken, the lawyer’s conveyancing fee, and property acquisition tax (equivalent to recording rights, in France) as well as banking, title registration and other documentation fees. Please note that the 2014 fiscal reform modified property acquisition tax brackets and tax concessions on personal real estate purchase.
4. Financing – bank loans and mortgages: Generally speaking, in Israel, the initial signed contract of sale will be the sole contract involved. A contract of purchase is completely binding – there is no suspension or waiver clause, and it obligates you to payment in full. However, please be aware that options and conditions for terms of loan in Israel are restricted and closely regulated under law. It is therefore advisable to explore financing and apply for a preliminary mortgage loan approval at the bank prior to signature of a contract. This may predicate an engineer’s inspection and adjuster’s valuation of the property in question as well as approval from the bank’s legal department. These also act as precautionary measures in order to prevent any unpleasant surprises upon completion.
The legal process relating to real estate purchase in Israel entails up-to-date knowledge of the pertinent regulations and laws. By consulting an expert lawyer who is highly specialized in this field, you can be sure you can address all the issues that might arise during the process of purchase.
Yaël Hagege Maruani
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