What three things should one have in mind before buying a property?
The three things that a potential buyer should always have in mind before purchasing property are as follows:
1. Make sure you have enough capital for the transaction, otherwise you might find yourself in breach of the contract due to something that could have been avoided.
2. Check if the seller is the real owner of the property. This can be done by looking at the Tabu Certificate at the Land Registry Bureau. This certificate gives the buyer the reassurance that the owner is an officially registered owner of the property. It also tells the last registered size of the property. If the size is larger, you may want to check that the extension was done legally so there will be a smooth transfer of the name through the necessary government legal process without any hitches. In the event that the property is not registered in Tabu, it could be that the prior purchase was made under the Israeli Land Authority (Minhal Mekarkey Yisrael). If the prior property contract is not found in either place, then one can check at the relevant housing company. Your lawyer, of course, can perform this research for you.
3. Is the property sellable? Make sure there are no warning notes, mortgages or disposition court orders that cannot be removed from the property.
At what point does a real estate lawyer need to be involved in the process?
After finding a property and setting the purchase price, and prior to signing any documents, it is important to consult with a real estate lawyer to make sure that there will be no surprises in this potential transaction.
Does it make sense to look into mortgages before finding a property?
Definitely. As mentioned above, prior to purchasing any property, one must know his maximum budget. A vital part of this may be knowing whether the bank will approve a mortgage for you, and trying to secure the best interest rates available.
Do real estate agents and lawyers usually work in conjunction?
It is important to understand the difference in the roles of each of the players in the transaction. It is the lawyer’s job to protect the client. First, he must make sure that the legal aspects of the property transaction are met, and second, he must make the client aware of all the legal ramifications of the contract. They don’t need to officially work together, but it’s good that the lawyer and real estate agent have a good professional working relationship
What is a zichron devarim and do you recommend signing one when purchasing an apartment?
A zichron devarim is a memorandum of understanding that can be used as a pre-contract agreement. Usually it states the general conditions of the transaction, such as the price, the delivery date of the property, etc.
It is important to know that signing a zichron devarim may have legal and real estate taxation consequences. Therefore, it is very important to consult with a lawyer prior to signing any document.
Sometimes a party will try to pressure the other side to sign such a memorandum of understanding. We have had several clients contact us for assistance after having already signed such a document without understanding all the implications. It is therefore important not to sign any document, especially when it comes to real estate, without consulting a lawyer beforehand.
What taxes need to be paid when purchasing property? Do they differ if you own another property, in Israel or abroad?
Both the seller and the buyer are subject to tax payment in such a transaction. The buyer has to pay purchase tax, and the seller has to pay betterment tax. If someone owns more than one property, he is subject to a higher tax rate. Further variables could affect tax rates as well.
Olim and people who do not own another apartment may be eligible for tax discounts. There are different types of taxation discounts, therefore we advise to consult a lawyer who is familiar with Land Tax Laws and can make a tax payment simulation prior to the purchase.
What happens if a buyer has an engineer or architect inspect the property and finds there are either hazardous materials used or structure or insulation problems?
When such a situation occurs, it is important to understand the full implications of this situation and the buyer may want to think again if he still wants to buy the property. Usually, whenever a malfunction is discovered in the property it affects the price of the transaction!
What if a property contains an illegal addition, such as an opened up chalal? What are the legal ramifications for the buyer?
Such situations have to be taken into consideration in advance of signing the agreement, including how it affects the price of the property. The legal responsibility for such cases will usually be placed on the seller.
Cohen, Decker, Pex, Brosh Law Offices is an Israeli law firm that provides legal services on a wide range of issues including: immigration law, commercial law, Israeli real estate law, inheritance law, labor law, corporate law, laws regulating not for profit organizations, tax law, contract law and legal representation in the courts of Israel.
Jerusalem Branch 02-999-8951