Buying and selling property in Israel

The firm

Amos Ilan has been a certified attorney in Israel since 2003 and is a licensed notary (licence no. 214444). The office is at 17 IDF Street, Nes Ziona, and the practice centres on residential real estate: purchases of second-hand apartments, purchases from developers, and sales.

The firm is small by choice. Files are handled personally, and correspondence is conducted in Hebrew or English.

Why an Israeli transaction needs its own preparation

Two features of Israeli law shape almost every residential transaction.

The first is that a transaction in land is completed by registration. Section 7 of the Land Law, 1969, provides that a transaction in land is concluded by registration, and that until then what exists is an undertaking to carry out a transaction. Between signature and registration, the buyer's principal protection is a caution recorded in the Land Registry.

The second is that rights are not all recorded in the same place. A right may be registered in the Land Registry, managed by the Israel Land Authority, or held in the books of a housing company. Which of these applies determines what securities can be given, which approvals are needed, and how long the transaction will take. This is the first question to settle, before price and dates are agreed.

Buying a second-hand apartment

• Verify the right at its source. An extract from the Land Registry, a rights confirmation from the Israel Land Authority, or a confirmation from the housing company, as the case may be.
• Check encumbrances. Mortgages, attachments, cautions and third-party rights, and how each of them will be removed by completion.
• Check the property against the record. Area, attached parking and storage, and any additions built without permit.
• Check the planning position. What is permitted on the plot and in the surrounding area, and whether anything is pending.
• Match the payment schedule to the securities. Each payment should be made against a defined step, and the balance against delivery of possession and the documents required for registration.
• Agree who completes the registration, by when, and what happens if it is not done.

Buying from a developer

A purchase from a developer is governed by statute, and the statutory protections are not optional.

• Securities. Under the Sale (Apartments) (Assurance of Investments of Apartment Purchasers) Law, 1974, a seller may not take more than seven per cent of the price unless the buyer's money is secured by one of five methods, the most common being a bank guarantee.
• Voucher book. In a project with bank accompaniment, payments are made through the accompanying bank's voucher book and into the accompanying account. Payment by voucher is what triggers the issue of the guarantee, which must be provided within 14 business days.
• Release of the guarantee. The guarantee is returned only once possession has been delivered and the right, or a caution in the buyer's favour ranking ahead of any charge, has been recorded. Not against the keys alone.
• Late delivery. Section 5A of the Sale (Apartments) Law, 1973, provides compensation without proof of damage, calculated on the rental value of the purchased apartment. For contracts signed from 7 July 2022 the rates rise with the length of the delay.
• Indexation is limited. Section 5C of the same law prohibits linking payments to any index, subject to a narrow exception permitting up to half of each payment to be linked to the construction inputs index, provided that twenty per cent of the price is not linked at all.

Selling

A seller's exposure lies mainly in tax and in the undertakings given in the contract. Betterment tax, the conditions of the exemption for a single residential apartment, the removal of existing mortgages and attachments, and the obligations regarding the state of the property on delivery should all be examined before the contract is signed, not after.

Tax and deadlines

The buyer pays purchase tax and the seller pays betterment tax on the gain. Rates for a buyer who owns another residential apartment, and for a foreign resident, differ materially from the rates for a single-apartment buyer.

Two deadlines run from the date of sale and are easy to miss. Both parties must file a declaration with the Israel Tax Authority within 30 days, and the tax under the self-assessment is payable within 60 days, after which linkage differentials and interest are added.

Rates and thresholds are updated from time to time, and should be verified against the Israel Tax Authority at the date of the transaction.

Construction defects

Where a new apartment proves defective, the Sale (Apartments) Law distinguishes between an inspection period, which varies by item under the schedule to the law, and a three-year warranty period that begins when the inspection period ends. During the inspection period the seller must show that the defect was caused by the buyer; afterwards the buyer must show that it originates in the planning, the work or the materials. Notice of a defect must be given in writing and within the periods fixed by the law.

Notarial services

As a licensed notary, the firm also provides notarial services connected with real estate and otherwise: authentication of signatures, irrevocable powers of attorney used in transactions, certification of copies, certification of translations between Hebrew and English, affidavits, notarial wills and continuing powers of attorney. Notarial fees are fixed by regulation and are identical at every notary's office in Israel.

Clients living abroad

Owners and buyers who are outside Israel can, in many cases, complete a transaction without being present at every stage, through a notarial power of attorney. A power of attorney signed abroad before a local notary is valid in Israel under the law of the place where it was signed, and will usually need an apostille. Documents can be prepared and reviewed by email in advance.

Contact

• Phone: 052-5927592
• WhatsApp: send a message
• Email: [email protected]
• Address: 17 IDF Street, Nes Ziona, Israel
• Office hours: Sunday to Thursday, 08:30 to 19:00

Correspondence in English is welcome. The Hebrew pages of this site set out each subject in full.

Nothing on this page constitutes legal advice or a substitute for it. Every transaction is examined on its own facts, and tax figures and deadlines change from time to time.