Buying an apartment “on paper” (al ha’niyar), also known as buying off-plan, means purchasing a property directly from a developer (kablan) before it has been built. This is a very common way to buy a new home in Israel. While it allows you to own a brand-new property and customize some of its features, the process is quite different from buying a pre-existing home.
Here is a step-by-step guide to the process for buying an apartment “on paper” in Israel.
Step 1: Choosing a Project and Signing the Initial Agreement
After researching and choosing a specific project and apartment, the first step is to sign an initial registration form and pay a small, refundable deposit (typically $10,000 – 20,000 NIS) to reserve the unit. This takes the apartment off the market for a short period (usually 14-30 days), giving you time to have the main contract reviewed by your lawyer.
Step 2: Legal Review and Contract Negotiation
This is a critical phase. You MUST hire your own real estate lawyer to represent you; do not rely on the developer’s lawyer. Your lawyer will thoroughly review the main purchase agreement, technical specifications (mifrat), and blueprints. They will negotiate on your behalf to ensure your rights are protected, focusing on key areas like:
- The payment schedule.
- Guarantees against construction defects.
- Penalties for late delivery.
- Ensuring the apartment is properly registered in the Land Registry (Tabu) upon completion.
Step 3: Signing the Contract and Making the First Payment
Once you are satisfied with the terms, you will sign the contract. At this point, you will make your first significant payment, which is usually 7-20% of the total purchase price. This initial payment is typically made from your own capital, as banks will not issue a mortgage until the contract is signed.
Step 4: Securing a Mortgage
With a signed contract in hand, you will now formally apply for a mortgage from a bank. The bank will use the contract’s payment schedule to plan its disbursements. The developer’s project must have “bank accompaniment” (livui bankai), which means the bank is overseeing the project’s finances. This provides crucial protection for your investment.
Step 5: Staged Payments Linked to Construction Progress
You do not pay the full amount upfront. Instead, you make a series of payments throughout the construction period, as laid out in the contract. These payments are tied to specific construction milestones (e.g., completion of the building’s frame, interior plastering, etc.).
It’s important to remember that the unpaid balance is usually linked to the Construction Inputs Index (Madad Tashumot HaBniya). If this index rises, the final price of your apartment will increase. This must be factored into your budget.
Step 6: Choosing Finishes and Requesting Changes
At a certain stage, the developer will invite you to choose your finishes from a selection of standard options (e.g., floor tiles, kitchen cabinets, bathroom fixtures). Any upgrades or changes (shinuyim) beyond the standard specifications will cost extra and are paid directly to the developer or their suppliers.
Step 7: Final Handover and Protocol
Once construction is complete and the developer receives the necessary occupancy permit (Tofes 4), you will be called for the final handover (mesira). You will inspect the apartment with the developer’s representative and create a “protocol” list of any defects or incomplete items that need to be fixed. After you sign the protocol and make your final payment, you will receive the keys to your new home.
The entire process, from signing to receiving the keys, can take 2-4 years. It requires patience and careful financial planning, but the reward is a brand-new home built to your specifications.
