You have decided to buy a new, first-hand flat in Israel. Your co-contractor, the seller, is the developer or builder himself: the « kablan »; and this is what is known in Hebrew as a « dirat kablan ».

Buying a property off-plan, i.e. not yet built or finished, requires special warnings and checks to ensure that the purchase is made as smoothly as possible. There are a number of points to which you need to pay particular attention. It’s not that the developer isn’t trustworthy, but your interests, and therefore your concerns, are not the same.

The contract
When you are interested in a « dirat kablan », the estate agent (very often a salesperson from the developer) will ask you to sign a reservation form and deposit a sum of money, between 10,000 and 50,000 shekels, in order to obtain the contract and its appendices.

Do whatever is necessary to obtain the contract so that you can study it before signing the form, because even though in most cases this sum of money will be returned to you in the event of a withdrawal (generally if no contract is signed within 30 days), you should be aware that buying a flat directly from a kablan is buying on paper, because the property has not yet been built or at least delivered, so ask for the paper where everything is set out.

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Planning permission (Heiter Bnia)
Many flats are now marketed and/or sold even before the developer has obtained planning permission. This is the document that sets out in writing the building/destruction/modification application and plans approved by the planning authority. Insist on seeing this document or at least having access to it. If the building permit has not yet been obtained, ask whether the Descriptive Plan has been given (in Hebrew Tab »a).

Article 145 of the Planning and Building Act 1965 is clear: without Planning Permission, no operation can be carried out on a plot of land; and without a preliminary descriptive plan, there can be no Planning Permission. The two documents are linked; however, you can take the option of committing yourself before Planning Permission is issued; just don’t do it without a descriptive plan (Tab »a). Do not commit to this type of project on the basis of promises.
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Your representative
When acquiring a « dirat kablan », in addition to your lawyer’s fees, you will have to pay the fees of the kablan’s lawyer, even though a reform has limited them to NIS 5,000 excluding VAT in most transactions (they used to be 1.5% or even 2% excluding VAT of the amount of the transaction). As a result, and in order to save money, many people are tempted not to be represented and to retain the kablan’s lawyer alone. It should be noted that these fees are essentially linked to the registration of the property and the co-ownership in the Land Registry, but in no way to the representation of the buyer in the transaction. In fact, it has been compulsory for the last ten years or so to state in the kablan’s purchase contract that the kablan’s lawyer does not represent the buyer.
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Only someone representing you will be able to demand that the proposed contract include a date for handing over the keys that does not exceed a pre-agreed period, and that the keys cannot be handed over in exchange for the final payment and the submission of certain documents; and also that the contract not be signed without the issue of penalties and the seller’s obligations being raised. Some articles in kablan contracts have been banned by court rulings, but equivalent articles can still be found. Remain vigilant and get yourself represented.

Key points:

If possible, obtain the contract before depositing a reservation deposit;
Ask what stage the project is at;
Sign a power of attorney on behalf of a solicitor who will represent you, so that you are not alone when dealing with the developer;
Study the plan of the proposed flat, the floor on which it is located, and the technical description of the work to be carried out in the flat and the building;
Ask your lawyer how and when the registration of your flat in the land registry in your name will take effect;

This document does not constitute legal advice and does not replace specific legal and/or tax advice. We will be happy to answer any legal questions you may have. Our firm specialises in property law, inheritance law, company formation and management and intellectual property.

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Counsel Emmanuel Charbit