Buying a new construction property “on paper” (al ha’niyar) directly from a developer (kablan) in Israel is an exciting process, but it’s fundamentally different from buying a pre-owned home. It requires careful due diligence and a clear understanding of the stages involved.
The process begins with finding a project you are interested in and ends with you receiving the key to your brand-new home. The timeline can span several years from the initial signing to the final delivery.
Step-by-Step Guide:
- Choose a Project and Developer: Research the developer’s reputation thoroughly. Look into their past projects, financial stability, and track record for delivering on time.
- Hire Your Own Lawyer: This is the single most important step. The developer’s lawyer works for the developer. You need your own independent real estate lawyer to protect your interests, review the contract, and verify the project’s legal standing (e.g., building permits, land ownership).
- Negotiate and Sign the Purchase Agreement: Your lawyer will negotiate the terms of the contract. This includes the final price, the payment schedule, the technical specifications (mifrat) of your apartment, and penalties for delays.
- Secure Financing: If you need a mortgage, you will begin the process with a bank. Note that for new builds, the bank releases funds to the developer according to the construction progress, which is linked to your payment schedule. The Bank of Israel has specific rules for these types of loans.
- Make Staged Payments: You will make payments to the developer at milestones outlined in the contract (e.g., upon completion of the building’s frame, exterior walls, etc.). These payments are protected by a bank guarantee provided by the developer.
- Final Inspection and Handover: Before the final payment, you will conduct a walk-through of the apartment to identify any defects (protocol rishoni). Once these are addressed and the property is officially delivered, you will receive the key.
Buying a new construction property in Israel can be a great investment, but it’s a complex legal and financial process that demands professional guidance every step of the way.
