Buying an Apartment from an Israeli Contractor / Ohad Shpak
For most Israelis, buying an apartment is the biggest transaction they will make in their lives. Tens of thousands of people buy completely new apartments every year in Israel from contractors – or “on paper” (not yet built) apartments or those still under construction. When talking about buying apartments from a contractor, we’re also referring to apartments in urban renewal projects – “Tama 38” or total teardowns called “Pinui U’Binui”.
If you choose to buy a new real estate property from a contractor in Israel, there are several steps you should take before signing the contract:
1. Check out the community – Tour the area and talk to your maybe-future-neighbors. Check whether the environment matches your needs: nearby schools and kindergartens, public parks, synagogues or public transportation. It is also better to check whether construction is planned in a nearby area or commercial center. lawyer-in-jerusalem or lawyer-in-tel-aviv
2. Ownership of the land – Check whether the developer or contractor from who you intend to purchase the property is entitled to build . For this, you can ask for a land registry status of rights (in the case of private ownership of the land) or an Israel Land Authority status of rights (if the land is owned by the state or JNF). Remember, if the land is state-owned, check if it has been discounted (one-time payment). Otherwise you may be required to make payments that surpass the price of the apartment.
3. Contractor – Find out who’ll be running the project. Sometimes the contractor at the site is not the developer behind the project. See if they’re licensed as a registered contractor. In addition, it’s best to examine the developer/firm’s financial stability, experience and reputation. It is crucial to examine other projects of which construction has been done by the same team.
4. Building permit – Remember that without a building permit, a contractor can not start building your property. If you intend to purchase an apartment in a project while construction has already begun, ask to see the building permit, and check that the permit actually relates to the land on which the real estate property you are considering to purchase is located (yes, that kind of trickery happens). You can purchase an apartment in a project that has not yet received a building permit, but it is better to make sure that there is a clear expectation of when the permit will be granted, and that you have right to cancel if, after this period, no permit was received.
5. The apartment – Before choosing your desired apartment in the project, examine the direction of airflow, the size of the apartment, additional spaces (parking/balcony/storage room) and the internal planning/specification. If you decide to buy an apartment with an adjacent roof or garden, make sure that in the areas adjacent to the apartment you intend to purchase, there is no plan to install facilities belonging to other tenants (for example, boilers on the roof) or the entire building (sewage management in the garden). The apartment you choose will greatly affect your level of comfort in the future.
6. The building – Ask the developer/contractor for the building plans. That way, you’ll know how many apartments are expected to be built in the building and what the sizes of the shared areas are. In addition, it’ll be possible to understand the nature of the shared facilities: the lobby, a shared storage room, the amount of elevators, a walk-in room, shared garden areas, location of parking lots and warehouses, etc. Consider that facilities like a gym, many elevators and pool in the building are attractive additions, but there may be high management fees every month because of these.
After examining all of the above issues and deciding to start the process of buying a new apartment, contact the contractor for the price of the apartment, the order of payments, linkage of payments to the index of construction inputs, technical specifications and the cost of upgrades and changes.