The Israeli purchase contract: what you are actually signing
Guide · Buying
The Israeli purchase contract: what you are actually signing
An Israeli sale contract does the work that in England is split between a survey, searches, a mortgage offer and a conveyancer's report. It is longer than you expect, it is negotiated line by line, and nearly everything that protects a buyer is in it because his lawyer put it there.
Before the contract: never sign a zichron devarim
A zichron devarim is a short memorandum of the main terms, usually produced by an agent, usually handed over at the kitchen table with the words "it is not binding, it just holds the apartment." It is frequently binding. Israeli courts have repeatedly held that a memorandum identifying the property, the parties and the price can constitute an enforceable contract for the sale of land.
The consequence people miss. Signing a binding memorandum can trigger the purchase tax reporting clock and, if you then walk away, expose you to a damages claim. Say clearly that your lawyer will produce the contract, and sign nothing at the viewing. There is no transaction in Israel that is lost by waiting a week for a properly drawn contract.
Reading the Tabu extract
Israeli land is identified by block and parcel — gush and chelka — and for an apartment usually a sub-parcel (tat chelka). The extract from the Land Registry, the nesach tabu, tells you who owns it and what is registered against it. Your lawyer will read it. You should understand what he is reading.
The clauses that decide the deal
- The payment schedule. Israeli practice ties instalments to milestones — signature, caution note registration, mortgage drawdown, vacant possession. The last payment should be meaningful and should be against keys.
- The hearat azhara. Registration of a caution note in your favour at the Land Registry, immediately after signature, is the single most important protective step in the transaction. It stops the seller selling the same apartment twice and takes priority over later claims.
- Mas shevach and the section 15(b) advance. Where the seller owes capital gains tax, the buyer may be required to withhold and remit part of the price directly to the tax authority. Get this right or you can find yourself liable for the seller's tax.
- Tabu clearance. Completion of registration depends on tax clearance certificates (ishur misim) from the tax authority and the municipality, plus confirmation that hetel hashbacha, if any, is paid. The contract should say who obtains what, by when, and what happens if they do not.
- Vacant possession. Date, condition, what stays, and a retention held against the seller's failure to hand over clear.
- Breach and remedy. Israeli contracts routinely fix agreed damages for fundamental breach — often around ten per cent. Check it cuts both ways.
Buying off-plan: the Sale Law securities
If you are buying from a developer before completion, your money is protected by the Sale (Apartments) (Assurance of Investments of Purchasers of Apartments) Law 1974. The developer must secure every payment, most commonly by a bank guarantee under that law, sometimes by insurance, a caution note or a registered mortgage in your favour.
Two rules follow, and they are not negotiable. Pay only into the project's designated account (chesbon liva'i) named in the contract, never to the developer directly. And release each payment only against delivery of the corresponding guarantee — a guarantee that matches the sum you just paid, in your name, correctly dated. A developer who is slow with guarantees is telling you something.
Separately, watch the specification (mifrat techni), the delivery date and the permitted delay — sixty days' grace is standard before compensation runs — and the standard of finish, which is where the gap between the marketing suite and the delivered apartment lives.
Signing from abroad
You do not need to be in Israel. A power of attorney to your Israeli lawyer, notarised and apostilled in your own country, allows him to sign and to register. Israeli banks and the Land Registry are exacting about the form of these documents, so have the wording drafted in Israel and executed abroad, rather than the other way round.
The other remote-purchase essentials: a lawyer who acts only for you and not also for the seller or the developer, an independent surveyor or engineer to inspect before completion, and a video walkthrough on the day of handover conducted by someone who is not the agent.
What to have before you sign
- A current Tabu extract, read by your lawyer, dated within days of signature.
- Written confirmation of your maximum borrowing from the lender, not an indication.
- A purchase tax calculation for your own status, in writing.
- Confirmation of any hetel hashbacha exposure and who bears it.
- A surveyor's report on anything older than about twenty years, and on anything with a renewal scheme attached.
- For off-plan: the specification, the delivery date, the delay clause, and the form of guarantee you will receive.
Reading the contract — the clauses that decide who carries the risk
Episode 6 and 7 of Before You Buy, on zichron devarim and reading the Tabu.
Nothing on this page is legal, tax or financial advice.
Questions we get asked
Do I need my own lawyer if the developer provides one?
Yes. The developer's lawyer acts for the developer and charges you a registration fee; he is not your adviser. On a resale, a lawyer acting for both sides is legal in Israel and still a bad idea for the buyer.
What is a hearat azhara and when is it registered?
A caution note recorded at the Land Registry noting your right under the contract. It should be registered immediately after signature, and the contract should tie a payment instalment to its registration.
Can I be liable for the seller's capital gains tax?
In defined circumstances the buyer must withhold an advance against the seller's mas shevach and remit it. Handled properly this is routine; handled badly it becomes your problem, which is why the mechanism belongs in the contract.
What happens if the developer delivers late?
The Sale Law provides compensation for delay beyond a grace period, generally sixty days, calculated by reference to rental value. Check what your specific contract says, because developers draft around the edges of it.
Is a survey normal in Israel?
It is not the automatic step it is in Britain, and most buyers skip it. On older stock, on anything with damp, and on anything being sold with a renewal scheme in prospect, instruct one anyway.
Fourteen films on the legal side of buying
Purchase tax, betterment levy, the memorandum, the Tabu, off-plan securities, defects and warranty periods — the whole Before You Buy library, free to watch.
This is general information about property in Israel, not legal, tax or financial advice. Figures, thresholds and procedures change, and every transaction turns on its own documents. Take advice from an Israeli lawyer on your own contract before you sign anything or send any money.
This index publishes data and takes no money from anyone it writes about. No advertising, no paid placement, no sponsored entries, and no referral or introduction fee from any agent, developer, bank, lawyer, surveyor or mortgage broker named anywhere on this site. It is not a licensed brokerage, it holds no listings, and no property is sold through it.