Finally realize that buying an apartment from a developer can be complicated? Well, wait… it gets even more confusing sometimes! When you buy form a developer, there are certain safeguards that are in place, and when you along with tens or hundreds of others are buying at the same time, there will be different checklist items that all buyers will need to have, making securing your rights at least somewhat easier. When you buy roof rights or from a private entrepreneur developing a few apartments at a time, or some other “unique” deal, there are a variety of other potential issues to be aware of. We share some of those we have come across in our work with clients and their experiences with you below:
Check out the land rights
When you buy a second-hand apartment, you have to be careful about all sorts of complications that you would hope would not come into play when you start “clean.” Maybe that’s one of your considerations in purchasing a unit before it is built. However, even when buying “on paper,” be proactive about checking the legality of the project. If this is private land, you want to check the title in the Land Registry Bureau (TABU). If it is Israel Land Administration land, check that the developer has the rights to build, and ask to see the contract from the ILA.
Check out the kablan
Do a background check on your developer or contractor to see he is licensed and bonded to do the type of work he’s planning to do.
Unfortunately, you still need to be wary of illegal construction. If you’ve checked that he has the rights to build on that land, and that he is licensed for that sort of work, you’re ahead of the game. But did he sell more units on paper than he has rights to build? Are you sure he’s only building as many stories as he is allowed?
At this point, we highly recommend you do some research and find a real estate lawyer with a lot of experience. In our office we like to work with lawyers who have enough experience and connections that they have already worked with your specific developer before as well as with his lawyer.
Is the property attached as a lien or mortgage somewhere?
Once again, our buyer may be asking, how could a project have a lien on it when before building has begun? Still, when dealing with a smaller project or expansions, you really want to make sure that the project is clean of liens, mortgages, legal procedures, or demolition orders. If the contractor is tied by some kind of debt or obligation, have a really experienced lawyer examine the details to see if it can be perfectly clear that the contractor’s debt will not in any way affect your rights. If he cannot clarify this, run. If he can, have him specify in your contract that the contractor undertakes to take care of his own debt, etc., without involving your apartment or the adjoining common property.
Registering a warning notice
A warning notice is a note registered in the Land Registry Bureau, once 7% is put down, that you are in the process of purchasing a certain apartment. When buying from a contractor or developer, the note makes you the official purchaser, preventing double dealings on the same unit. Before signing anything, verify (in writing, of course) that you are entitled to register a warning notice, and that under no circumstances can the developer prevent you from doing this, regardless of any other guarantee he may offer you.
What are you actually buying?
Read the building specifications. For you, this is the most important part of the contract. Here is where it says what you’re actually going to get for the money you’re putting down. Whatever they showed you on the 3-D screen in the sales office is not your apartment; that was for illustration only. Whatever they promised you that wasn’t put into writing, forget about.
Personalizing your apartment will add up very quickly, but the developer can be persuaded to include certain additions or changes in the course of construction, free of charge.
Air conditioning, additional water or electric outlets, outfitting the kitchen, window bars, even changes to the unit’s inner structure…. Any walls you want moved? Speak up now, before they are actually built.
Often a buyer won’t know what he can or should ask for, but lawyers with experience working with developers can be very successful in negotiating good prices for all these arrangements. For example, I usually ask that, if I specify my client’s individual needs before construction begins, as long as there are no additional materials involved, the changes will be free of charge. This enables buyers to receive the apartment of their dreams without adding to the purchase price.
Shia Getter is the CEO of the Shia Getter Group, a full-range real estate services firm in Jerusalem catering to the Anglo investor. He is a noted expert, columnist, and author of The Guide to Investing in Jerusalem Real Estate. He and his professional team manage many upscale Jerusalem properties and have helped countless people buy, sell, and renovate property in Israel.
This article is intended to provide general information about the subject matter covered. It is not meant to provide legal opinions, offer advice, or serve as a substitute for advice by licensed, legal professionals. This article is published with the understanding that the author or publisher is not engaged in rendering legal or other professional services.
The author does not warrant that the information is complete or accurate, and does not assume and hereby disclaims any liability to any person for any loss or damage caused by errors, inaccuracies or omissions, or usage of this article.
Laws and interpretations of those laws change frequently and the subject matter of this article has important legal consequences. If not understood, legal, tax, or other counsel should be consulted