Buying an apartment is one of the most important financial decisions of our lives. A second-hand purchase brings both the excitement of moving and responsibility for checking its legal, planning and financial aspects. This guide sets out the critical stages of a secure transaction.
1. Check property rights and the owner's identity
First, confirm that the seller legally owns the apartment and that it is not subject to third-party rights, attachments, charges or similar restrictions. Rights may appear in several registers.
Land Registry, known as Tabu
The Land Registry operates within the Ministry of Justice and maintains Israel's land registers. It records ownership, long leases, mortgages, cautionary notes and other rights. Registration is conclusive evidence of property rights and legally binding against everyone.
Obtain an updated Land Registry extract(opens in a new tab). You need the block and parcel numbers and, for an apartment in a condominium, sometimes the sub-parcel number. Find them through GovMap(opens in a new tab) or the government address-to-parcel service(opens in a new tab).
Israel Land Authority
In new projects, and sometimes in buildings completed years ago, rights have not yet been registered at the Land Registry. Reasons range from a newly completed project to a contractor becoming insolvent before registration was completed.
Rights recorded with the Israel Land Authority are usually also recorded by a housing registration company. This is a developer or contractor authorised to administer apartment rights before registration at Tabu. It keeps the register until condominium registration is completed, records buyers' rights and mortgages, and issues certificates of rights.
Check the Israel Land Authority(opens in a new tab) or the housing registration company, meaning the project's contractor or developer.
Also check for registered pledges through the Pledges Registry(opens in a new tab).
These checks identify the registered owner and restrictions such as attachments, charges and mortgages.
2. Planning and engineering checks
Before signing, check the planning status of the property and the building. These checks can prevent future problems and help avoid risky transactions.
Check whether:
- The property and building have valid building permits.
- The municipality has classified the building as dangerous.
- A Form 4 or completion certificate permits occupation.
- Demolition orders or pending building applications exist.
Most municipalities provide engineering websites and geographic information systems, or GIS. Finding the information is not always straightforward, but it is possible. Examples include:
- Rishon LeZion GIS(opens in a new tab).
- Tel Aviv GIS(opens in a new tab).
- Tel Aviv engineering website(opens in a new tab).
- Rishon LeZion engineering website(opens in a new tab).
The building file contains permits, Form 4 or completion certificates, detailed building plans and submitted applications.
The condominium file is the official Land Registry file for a condominium. It contains documents and plans concerning the building and division of rights, including:
- The condominium plan: apartment boundaries, common property, attached areas such as parking, storage or roofs, and their allocation.
- The condominium bylaws: residents' rights and obligations, including towards one another. If special bylaws were not registered, the standard bylaws in the Land Law apply.
- Ownership rights in each apartment and its proportional share of common property.
- Registration changes, including extensions, changes to attached areas and redistribution of space.
Download the file from the Land Registration and Settlement Authority(opens in a new tab).
3. Financial planning and a mortgage
A common mistake is committing to a purchase before examining its financial implications. How much equity do you need? How much can you borrow given your income? What monthly payment can you afford? What additional costs should you expect? Obtain clear answers before entering the transaction.
Minimum equity described in the source:
- First apartment: 25% of its value.
- Replacement home: 30%.
- Investment apartment, meaning a second or subsequent apartment: 50%.
- Government discount programmes, such as Mehir LaMishtaken and Mehir Matara: sometimes only 10%.
Allow for additional costs:
- Purchase tax, calculated by brackets according to the buyer's circumstances and transaction. Use the purchase tax simulator(opens in a new tab).
- Legal fees: 0.5% to 2% of the transaction.
- Estate agent fees: usually 2%.
- Registration and certificate fees, including cautionary notes and Tabu registration: several hundred shekels.
- Valuation and mortgage insurance.
- Renovation, furniture and moving.
Mortgage approval in principle
Before signing, obtain approval in principle from several banks. Comparing offers can save tens of thousands of shekels over time. This is a form of quotation confirming that the bank has examined your information and is willing to provide a mortgage.
Common mortgage tracks listed in the source are prime, described there as interest set by the Bank of Israel; fixed interest linked to the Consumer Price Index; fixed unlinked interest; and variable linked interest.
A combination of tracks and terms is usually chosen to balance market risks. The mix should suit your preferences, finances and repayment capacity.
4. Essential sale agreement clauses
The sale agreement is the central legal document. It should include the necessary protections.
Seller's declarations
- The seller is the sole registered owner and third parties have no rights in the apartment.
- There are no charges or attachments.
- There are no unauthorised building works.
- The apartment's systems work properly.
- The seller is not in bankruptcy proceedings.
Payment
- A clear payment schedule suited to your needs and capacity.
- Funds held in trust if, at handover, the seller lacks documents needed to transfer the rights.
- Release of those funds only against delivery of all transfer documents.
Handover date and condition
- A final handover date.
- Vacant possession, free of people and belongings unless expressly agreed otherwise.
- Agreed compensation for late delivery.
Mortgage clauses
- The seller's duty to cooperate with the bank.
- Signing documents within a short, defined period.
- Access for a valuer's inspection.
Taxes and fees
Specify who pays ongoing bills, taxes, building committee charges, registration costs and other transaction expenses.
Breach and cancellation
- What constitutes a fundamental breach.
- The amount of agreed compensation.
- The cancellation procedure.
A well-planned purchase
Buying a second-hand apartment requires planning, checks and professional guidance. A real estate lawyer can assist throughout, address the risks and protect your rights.
If you need personal advice or guidance with a transaction, contact me.
The information on this page is general information and is not legal advice.