In Israel, as in Israel, people tend to rely on themselves more than on anything else. This is evident in almost all aspects, but in such a large and significant deal as the sale of an apartment, many people feel that they became fully familiar with the real estate market at the stage when they bought the apartment and now feel that they know everything there is to know about the various bureaucratic systems, the financial field and legal side of real estate.
But what do you really know about the legal checks that must be performed before you sell the property? How can you ensure that the contract is not violated by the buyer? What can you do about reducing the sales tax and different payments? If you are planning to sell the apartment soon, these are all the important things you should know:
Warning note and irrevocable power of attorney
D. had already concluded the sale of the apartment he owned to the buyer and received the first payment for it. However, two weeks later, the buyer disappeared as if never existed, and did not transfer the remaining payment as required. Having no choice, D. had to negotiate with a new buyer until he found out that he was now prevented from making any deal with his apartment: The same buyer who allegedly “skipped out”, rushed to write a warning note on his behalf in the Land Registry Bureau, due to his first payment, – which prevents D. from carrying out any future action whatsoever, including the sale of his own apartment.
How is this possible?
A warning note is a note that is in the land registry of the property and it formally defines the ability or inability of the landowner to make transactions with it. The state understands that in business, as in business, a situation can arise in which a certain person is interested in an apartment and is undergoing a process with its owner, but suddenly it turns out that the apartment will be sold to a different unknown buyer. Therefore, it allows each buyer to register the warning note and thus protect himself.
Crooks, like the one who left D. with very severe restrictions on his own property, may take advantage of the ability to add a warning note in their favor and limit the seller permanently. Therefore, already at the first stage of the process of selling the property, it is very important for the seller’s lawyer to have the buyer sign an irrevocable power of attorney, according to which it will be possible to erase the warning note that will be registered in his favor. The lawyer will keep this power of attorney and will protect the seller from breach of the agreement.
Using an apartment sale lawyer to protect the seller’s rights
Lawyers specializing in real estate, deal, inter alia, with everything related to the sale or purchase of an apartment. The role is based on fully accompanying the seller of the apartment throughout all the important checks that he must perform before leaving the property, arranging and executing negotiations with the buyers regarding the price, fixing defects and damages, drawing up the sale contract (which protects the seller and guarantees his rights), tax planning and making a self-assessment of tax for the purpose of paying the sales tax, and of course, confirming the completion of the process and proper delivery of the apartment itself to the buyers.
One of the additional important actions taken with the sale of the apartment, concerns the situation in which the buyer takes a mortgage. This obligates the seller to sign a slightly risky form called a “mortgage letter”, which will be submitted to the buyer’s bank. This is an acceptable formal document which must be signed in every sale made with a mortgage and therefore it is important for the lawyer to examine it thoroughly and make appropriate changes if necessary, in order to protect your personal interests as the apartment’s sellers.
Can the buyer buy?
The real estate market in Israel is in a flow that allows free traffic of the sale and purchase of several apartments simultaneously. Many people who sell their apartment, simultaneously purchase another property and therefore there is great importance to the dates of payments delivery for the sold apartment and for the purchased apartment, so as not to create a situation where there is a need to pay for the new apartment, but the money for the old apartment (sold) has not yet been received. This situation is very possible and therefore it is important to have a reasonable time interval for any case where your buyer delays or is late with the payment – which may also violate the signed agreement in which the buyer committed to certain payment dates.
In order not to take a risk, it is recommended to check from the first stage whether the buyer is defined as a means limited debtor (you can check this on the Enforcement and Collection Authority website) and verify, before signing the sale contract, the borrower’s repayment ability, the height of the mortgage and request to review the approval of the mortgage, issued to him by the bank.
Expenses and payments in the sale
While the sweet part of the deal is receiving the payment for the sold apartment, one must pay very close attention to the payments that must be made as a result of the sale, including sales tax, confirmation for clearing or dragging of a mortgage, betterment tax and of course other relevant expenses such as repair of damages discovered after the buyer, his lawyer or an engineer on his behalf, examined the property, and the seller committed to fixing them in the negotiations and in the sale contract.
The costs are many and in some cases even high and there is a need to consider and plan your financial conduct with the real estate well, even if you don’t buy another apartment with the sale of your current apartment and move to the family’s apartment or rent and apartment. An apartment sale lawyer can assist you in planning and is also responsible for providing all the information about the payments you need to make.
Betterment tax – A tax by the local authority that permits the use of the current land in the areas of the local authority. The rate of this tax is determined for payment when the value of the property increases following approval of the master plan, construction expansion, etc. The payment is a condition for receiving a permit from the municipality, which states that the owner of the apartment has no debts and he may register the rights in the land registry under the name of the buyer.
Sales tax – A state tax, calculated from the profit (difference) of the sale of the apartment. In some cases, the sales tax includes an exemption from payment which can be exploited, and in fact, if this is one’s first apartment, that person can receive a full exemption from payment, provided that the apartment was used only for residential purposes and that the seller has not made any other real estate sales in the last four years. Those who are not exempt are entitled, in certain cases, to a reduction in the payment: apartment sales lawyer fees, purchase tax paid in the past when the apartment was purchased, agreement fees to the Israel Lands Administration, expenses for advertising the apartment, brokerage fees for the sale of the apartment and more.
Receiving protection in the sale process
The sale of an apartment is a large and expensive financial transaction, which is important to perform correctly, with familiarity with all possible parameters, conditions and risks throughout the process. With legal assistance from the right person who will be by your side like a real estate lawyer, you can ensure ideal transaction conditions and of course protect yourselves against the situation where you are forced to pay much more money in addition to what has already been done as part of the sale.
Our law firm engages in civil law and represents sellers in real estate transactions while providing the highest quality legal services, in accordance with the rules of ethics and full fairness with the client.
*The above article is by no means a legal advice; any use of this information is solely under the reader’s responsibility.