Selling an apartment - Best lawyers

Apartment Sale - A Significant and Complex Transaction

Selling an apartment is usually one of the most significant and complex transactions a person makes in their lifetime. It's not just about a physical asset, but an asset with great economic and emotional value. The sale process involves many legal, financial, and planning aspects, and therefore, guidance from an experienced and knowledgeable apartment sale lawyer is not a luxury, but a vital necessity to ensure your rights and execute a smooth and safe transaction.

On this page, we will review all the important stages and aspects in the apartment sale process in Israel, explain why it's crucial to use professional legal representation, what are the responsibilities of your lawyer, and how to choose the most suitable professional for you.

Why is it mandatory to use an apartment sale lawyer?

The real estate market in Israel is characterized by great legal complexity. Real estate law, contract law, planning and construction law, and tax law - all integrate together in an apartment sale transaction. Attempting to navigate this process alone, without appropriate legal knowledge and experience, may expose you to significant risks, expensive mistakes, delays, and even future legal complications.

The role of an apartment sale lawyer is primarily to protect your interests as sellers. He ensures that the transaction is conducted according to law, that your rights are fully preserved, and that you understand all the implications of the documents you are signing.

Here are some central reasons for the importance of legal representation:

Essential preliminary checks:

Before proceeding to sign a contract, your lawyer will perform essential preliminary checks. He will examine the registration of rights in the apartment (updated land registry extract or rights confirmation from Israel Land Authority/housing company), ensure there are no seizures, liens, conflicting warning notices, or restraining orders preventing the execution of the transaction. Additionally, planning aspects will be examined, such as compliance with building permit, existence of building deviations (which may affect property value and tax aspects), and existence of expected betterment levy.

Drafting and managing negotiations on the sale contract:

The sale contract is the central and binding document in the transaction. Apartment sale lawyers are entrusted with drafting clauses that will protect your rights as sellers, such as defining clear payment dates, establishing mechanisms in case of contract breach by the buyer, accurate declarations regarding property condition, and coordinating possession transfer date. The lawyer will represent you in negotiations with the buyer's lawyer, aiming to reach a balanced and fair agreement that serves your interests.

Handling tax aspects:

Selling an apartment in Israel involves various tax liabilities, mainly capital gains tax and betterment levy (if applicable). Your lawyer will examine your eligibility for capital gains tax exemption (for example, in selling a qualifying single residential apartment) or the applicable tax amount, assist in preparing required reports to tax authorities (real estate taxation and local authority) and work to minimize tax liability as much as possible within the law. He will also ensure receipt of all required tax clearances for completing the registration of rights in the buyer's name.

Guidance in removing mortgage and other liens:

If there is a mortgage on the apartment, the lawyer will guide you in the process of settling it with the bank, obtaining a letter of intent and subsequently a release letter/mortgage cancellation deed, required for transferring clean rights to the buyer. He will also handle removal of liens or other seizures, if they exist.

Managing transaction funds in trust:

In many cases, particularly when there is a mortgage on the property or expected delays in receiving tax clearances, part of the transaction funds are held in a trust account by the lawyer. The lawyer releases the funds to the seller only after all conditions set in the contract have been met, thus securing both parties.

Ensuring rights registration and transaction completion:

The seller's lawyer, in cooperation with the buyer's lawyer, is responsible for preparing all documents required for the Land Registry Office (Tabu) or Israel Land Authority, for transferring the apartment rights to the buyer's name. Only after completing the registration, the transaction reaches its successful conclusion.

Preventing mistakes and future risks:

Mistakes in contract drafting, failure to perform required checks, or non-compliance with legal requirements may lead to delays, fines, and even expensive legal claims. Guidance from an experienced apartment sale lawyer significantly reduces these risks.

Apartment sale process in Israel with lawyer guidance - step by step

The apartment sale process, despite being unique to each transaction, includes several main stages where the involvement of an apartment sale lawyer is critical:

Stage 1: Preliminary preparations and due diligence (pre-contract)

• Document collection: Even before finding a buyer, it's important to collect all relevant documents for the property: updated registration extract from Land Registry Office (Tabu), if the property is not registered in Tabu: updated rights confirmation, apartment blueprint and building permit, updated confirmation of municipal tax payment from local authority, confirmation of no debts to house committee, identity cards of all registered rights holders, if there is a mortgage: details of mortgage balance for settlement.
• Initial consultation meeting with the lawyer: In this meeting you will present to the lawyer the property details and planned transaction. The lawyer will examine the documents, explain the process to you, identify potential legal and tax issues and assess the transaction's viability.
• Examining tax aspects: The lawyer will examine your expected capital gains tax liability, according to property and seller data. Additionally, the possibility of betterment levy liability will be checked with the local planning and construction committee.
• Examining property condition: The lawyer will check the land registry extract/rights confirmation to ensure your rights are "clean", there is no prevention from selling the property, and there are no conflicting warning notices or seizures.

Stage 2: Finding a buyer and conducting initial negotiations

At this stage, usually the seller (or broker on his behalf) locates a potential buyer. After reaching basic agreement on price and basic conditions, the legal negotiation stage begins.

• Memorandum of understanding - is it worthwhile? Sometimes, parties want to sign a "memorandum of understanding" to "close" the transaction quickly. Important to know! A memorandum of understanding, if it includes the essential details of the transaction, may be considered a binding contract for all intents and purposes under Israeli law. Signing a memorandum of understanding without prior legal consultation by an apartment sale lawyer is dangerous and not recommended.

Stage 3: Drafting the sale contract and managing legal negotiations

This is the most critical stage, where the expertise of an apartment sale lawyer comes to expression.

• Contract draft: Usually, the seller's lawyer is the one who prepares the first sale contract draft. The draft is transferred for review and negotiation with the buyer's lawyer.
• Central clauses in the sale contract from the seller's perspective: seller's declarations, buyer's declarations, consideration and payment dates, possession transfer date, warning notice registration, taxes and fees, breaches and remedies, property condition ("As Is").
• Managing negotiations: Your lawyer will manage negotiations with the buyer's lawyer on all contract clauses, while carefully maintaining your interests.

Stage 4: Signing the sale contract and reporting to tax authorities

• Signing ceremony: After the parties reached agreement on all contract terms, a signing date is set. At this ceremony, both parties and their lawyers meet, review the main contract points again, and then sign the contract copies and accompanying documents.
• First payment: At the signing ceremony, the buyer transfers the first payment to the seller or to the lawyer's trust account, as agreed.
• Reporting to tax authorities: According to real estate taxation law, the sale transaction must be reported to tax authorities within 30 days from contract signing date. Your lawyer will prepare and submit the required reports.

Stage 5: Receiving tax clearances and removing liens

• Receiving capital gains tax clearance: After submitting the report and paying capital gains tax (if applicable), or receiving exemption, a clearance must be obtained from real estate taxation authorities confirming no capital gains tax debts. This clearance is vital for transferring rights in Tabu.
• Receiving municipal/local authority clearance: A clearance must be obtained from the local authority directed to the Land Registry Office, confirming no municipal tax, paving levy, sewage levy debts, as well as betterment levy payment (if applicable).
• Mortgage settlement (if existing): If there is a mortgage on the apartment, it must be fully settled with the bank. After settlement, the bank will issue a "release letter" or "mortgage cancellation deed" allowing deletion of the lien from Tabu.

Stage 6: Transferring apartment possession

On the date set in the contract, and after the buyer paid the full consideration (or most of it, when remainder is held in trust against receiving final tax clearances), the seller transfers apartment possession to the buyer.

• Transfer protocol: It's recommended to prepare a short transfer protocol documenting the apartment's condition at transfer, meter readings (electricity, water, gas), and key transfer. Both parties sign the protocol.
• Account transfer: The seller must arrange for transferring electricity, water, gas, and municipal tax accounts to the buyer's name close to the possession transfer date.

Stage 7: Transferring rights in Tabu (or relevant authority)

This is the final and concluding stage of the transaction. After receiving all required clearances and after possession transfer and full payment, the lawyers of both parties submit to the Land Registry Office all documents required for registering the apartment in the buyer's name. After the registrar approves the transaction, the apartment rights are registered in the buyer's name, and the transaction is finally completed.

Main roles of an apartment sale lawyer - summary

In summary, the roles of an apartment sale lawyer are numerous and varied, designed to ensure your interests throughout the complex process:

• Ongoing legal consultation: Providing explanations and close guidance in all transaction stages.
• Checking rights and property condition: Verifying ownership, locating liens, seizures, or registration problems.
• Examining planning aspects: Checking building permits, building deviations, and their implications.
• Handling tax aspects: Consultation, reporting to authorities, and obtaining tax clearances.
• Drafting and managing negotiations on the sale contract: Ensuring fair conditions and protecting your rights.
• Guidance in removing liens: Handling mortgage and seizure settlements.
• Supervising payment execution: Sometimes through trust account.
• Preparing documents and executing rights registration: Completing the transaction formally.
• Problem solving and risk management: Providing solutions to unexpected issues that may arise.

Working with apartment sale lawyers with experience and expertise in real estate is the safest way to ensure the transaction will be executed smoothly, efficiently, and most importantly - in a way that preserves your rights and interests as sellers.

Common issues and potential problems in apartment sales

Building deviations:

If building deviations are discovered in the apartment (construction without permit or contrary to permit), this may delay the transaction, affect property value, and result in fines or need to legalize the deviations. A lawyer will assist in early identification of the problem, consultation regarding possible courses of action and drafting appropriate contract clauses.

Unknown seizures or liens

Thorough examination by the lawyer of the land registry extract and other records can locate liens or seizures the seller was not aware of. The lawyer will work to remove them before or within the transaction framework.

Difficulties in obtaining tax clearances:

Sometimes, the process of receiving tax clearances is delayed due to disputes with tax authorities or bureaucracy. An experienced lawyer will know how to manage the process with authorities efficiently.

Contract breach by the buyer:

If the buyer breaches the contract (for example, doesn't pay on time), your lawyer will represent you in demanding contract enforcement or receiving agreed compensation, and if necessary will take legal proceedings.

Hidden defects in the apartment:

The seller has a disclosure obligation regarding material defects known to him. Non-disclosure may lead to claims after the sale. A lawyer will advise you how to act and draft appropriate declarations in the contract to minimize this risk.

Problems in Tabu registration:

Mistakes in previous registration, problems in rights chain, or specific requirements of the registration office may delay ownership transfer. A lawyer with experience in transaction registration will know how to handle these issues.

How to choose the right apartment sale lawyer for you?

Choosing the lawyer who will accompany you in the apartment sale transaction is an important decision. Here are several criteria that will help you:

• Experience and specific expertise in real estate: Ensure the lawyer you choose is a lawyer specializing in real estate with proven experience in accompanying apartment sale transactions, particularly in representing sellers. Don't hesitate to ask about the number of similar transactions he has accompanied.
• Recommendations and reputation: Look for recommendations from friends, family, or colleagues. Check reviews and opinions online (while exercising judgment).
• Personal chemistry and communication: It's important that you have good chemistry with the lawyer and a sense of trust. Ensure he is available for questions, explains things clearly and patiently, and updates you regularly.
• Thoroughness and attention to detail: Real estate transactions require precision and attention to small details. Be impressed by the lawyer's thoroughness.
• Fee: Clarify the fee structure in advance. Usually, the fee in real estate transactions is a certain percentage of the transaction price (for example, 0.5% to 1.5% plus VAT), or a predetermined fixed amount. Ensure you understand what the fee includes and whether there are additional expenses.
• Availability and location: Although today much of the communication can be done remotely, you might prefer a lawyer whose office is conveniently located for you, especially if many meetings will be required.

In conclusion

Selling an apartment is a central and significant event. The involvement of a professional, experienced, and reliable apartment sale lawyer is the key to ensuring a safe, legal, and successful transaction, while maximally preserving your interests as sellers. The investment in quality legal guidance is an investment in your peace of mind and protection of your valuable asset.