The seller's signature was forged after you bought the apartment: what to do now
What happened in the case that reached the Supreme Court?
A very strange case. In 2015 a couple bought an apartment in central Israel. The contract was signed, the price was paid, the apartment was registered in their name at the Land Registry and they took out a mortgage. Only afterwards did it emerge that the seller had acted together with a third party, who impersonated her husband and signed in his name. The husband claimed that he had known nothing of the transaction and that his signature had been forged. The price paid was about NIS 420,000 below the value of the apartment according to the appraiser.
The District Court set aside the sale only as regards the share of the husband, who had not signed. As regards the share of the wife, who had signed herself, the sale remained valid. The result was harsh for all parties: the buyers were left owning half an apartment jointly with strangers. Even more puzzling, the District Court held that the mortgage would remain registered over the whole apartment.
The case in the District Court had been consolidated with another case, in which the wife had sold another of the couple's apartments, and there too an illogical result was reached. In that other, consolidated case, a decision was made to appeal to the Supreme Court, and only at that stage did our office join in representing the buyers. Even that was late, because the previous lawyer had advised that an appeal was pointless, and the deadline had passed. Nevertheless, we decided to file a response so that the Supreme Court would understand that an unreasonable result had been produced. In this way, which has no basis in the Rules, and on the court's recommendation, the parties reached a comprehensive settlement: the buyers paid an additional sum and received full ownership of the apartment, subject to the mortgage; the note entered in the register during the proceedings (the court may order such a note to be registered under section 130 of the Land Law) was deleted; and the related monetary claims were struck out. The settlement was given the force of a judgment.
Is a transaction with a forged signature valid?
As a rule, not as against the person whose signature was forged. The owner who did not sign did not consent to the transaction and is therefore not bound by it. On the other hand, as noted, the District Court held that the mortgage remained in force, which was an unreasonable result in that case. In certain cases the law protects a good-faith buyer who relied on the entry in the Land Registry (section 10 of the Land Law, 5729-1969), but that protection is very limited where forgery is involved, and the courts tend to protect the true owner.
The share of the owner who did sign may remain valid, as happened in our case. This leads to co-ownership between the buyers and the original owner, which is hard to get out of without an agreement or further proceedings.
What signs should raise a red flag?
- A price significantly below market value, with no reasonable explanation.
- One of the owners does not come to meetings or to the signing and is represented by a "power of attorney" or by "consent over the phone".
- Pressure to close quickly, before you have had time to check.
- A request to transfer the money to an account that does not belong to the registered owners.
- A discrepancy between the details in the Land Registry extract and what you are being told.
How do you verify the sellers' identity before signing?
- All the registered owners listed in the extract sign in the presence of a lawyer, with an original identity document. In this case, the buyers had no lawyer acting for them in the transaction.
- A power of attorney is accepted only if it is notarial or was signed before a lawyer, and it is verified with the person who gave it.
- Payments are made only to a bank account in the name of the registered owners.
- A cautionary note is registered immediately after signing.
- Your own lawyer checks all the documents personally, rather than relying on the other side's lawyer.
What do you do if it has already happened?
Do not panic and do not give up. There are several routes: protecting your rights in court, examining the liability of whoever was supposed to verify the identity of the signatories, and negotiating a settlement that leaves the apartment in your hands. The earlier you seek advice, the easier it is to keep your options open.
When should you consult a lawyer?
Have you received a letter claiming that your transaction is defective, or does something in a transaction you are about to sign look wrong to you? Send us the documents for review before you pay another shekel.
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About the author
Amos Ilan is an advocate (Israel Bar no. 35320) and a notary (licence no. 214444). The office is at 17 Tzahal Street, Ness Ziona, and handles real estate transactions, construction defects, condominium disputes and civil litigation.
Questions and answers
If the apartment is already registered in my name at the Land Registry, am I protected?
Not necessarily. Registration at the Land Registry does not cure a forgery, and the court may order the register to be rectified.
Does my mortgage remain in force?
That depends on the outcome of the proceedings and on the bank's position. In the case described, the settlement was made subject to the existing mortgage.
Can I sue whoever deceived the sellers?
Yes, but often there is no one to recover from or, as here, the identity of the impostor is not known at all. It is therefore important to examine the liability of other parties to the transaction as well.
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