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What you need to know about buying your first home

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Buying an apartment is usually the biggest purchase of one’s life, and for most of us it represents a significant financial outlay. Therefore, once we’ve found  a second hand apartment in Israel we like,  it’s very important to check out several angles.

 

The surroundings:

We recommend wandering around the neighborhood, both during the day and at night, and to speak with the neighbors and the co-op board to find out if there are any problems with the building or its residents. Also, are there plans to renovate the building? What are the municipality’s plans for the immediate surroundings? Are there cell phone towers or high voltage power lines near the apartment and/or the building? What public institutions (schools, playgrounds, libraries, shopping centers, clinics, etc.) are nearby? Is there convenient public transportation? 

It is especially important to find out if construction is planned for the immediate vicinity. Contact the local Planning and Construction Committee, a fixed feature of every local government, to gather this information.

 

The apartment:

  1. It is important to check the apartment’s physical condition. We recommend that an engineer do this to make sure there are no serious construction flaws.
  2. It is also important to check that the building and apartment were built with all the legal permits and there are no building code violations. This can be ascertained by looking at the building’s file kept at the Local Planning and Construction Committee. We recommend that an assessor or engineer do the check. If there are building code violations, the purchase agreement must contain a written clause that clarifies the understanding between the buyer and the seller about who bears responsibility for redressing these violations.
  3. The legal standing: It is important to ascertain that the apartment is registered to the seller in the relevant rolls at the Land Registration Office, the Israel Land Authority, the housing company, and other similar sources. It is also critical to see if the seller’s rights to the apartment are in any way attached or mortgaged, and if there are any other obligations vis-à-vis the sellers rights to the apartment (such as liens, tenants’ rights, caution notes, etc.). This check is usually carried out by the real estate lawyer representing you. Make sure that, as part of the purchase agreement, the seller commits to removing all obligations and attachments related to the rights to the apartment. You take over the property only after its rights are free and clear of any third-party rights or obligations.

 

Purchase tax

Anyone purchasing an apartment must pay a purchase tax. The difference between the purchase tax for a buyer who owns only this property and the purchase tax for a buyer who owns another apartment is quite significant. Therefore, we recommend you consult with your real estate lawyer to see what purchase tax you may have to pay for buying this apartment.

 

Mortgage:

If you intend to finance part of the payment for the apartment with a mortgage loan, we recommend you ask the mortgage bank you intend to borrow from to preapprove you before you get to the contract stage. By all means, compare the terms offered by the various mortgage banks and choose the bank making the offer most attractive to your own personal circumstances. Furthermore, it is quite customary to negotiate with the banks over the terms they offer. Doing so can save you a significant amount of money.

 

Important points in the purchase agreement:

  • It is important to incorporate a seller declaration in which s/he declares that the apartment and its systems are in good repair, that there are no building code violations associated with the apartment, and that there are no conflicting rights and/or registrations associated with the property.
  • Transfer of ownership and property rights: It is important that the document state that the apartment must change hands empty and clear of people and objects, with all systems fully functional and operating as they did when the buyer saw them.
  • Payments: It is important that the first payment be held in trust until a caution note in your favor is entered into the Land Registration Office and only then handed over to the seller. Similarly, the last payment be made only in return for transferring ownership and property rights and taking delivery of the keys, with the rights of the seller to the apartment free and clear of any third-party rights or obligations. It is important to leave a certain sum of money in trust to ensure you receive all the approvals the seller has to provide in order to register the property rights in your name (the lawyer representing you can advise you on how large a sum to deposit).
  • It is important the seller has a deadline by which s/he must provide all relevant documents for you to complete the process of registering the property rights in your name.
  • Mortgage: It is important to get the seller’s commitment to sign all relevant documents that the mortgage bank will demand before granting you a mortgage loan.

 

Given the importance and complexity of buying a home, we recommend you be represented by a lawyer specializing in real estate to represent your interests alone (rather than those of the seller too) in order to safeguard your interests and rights.

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