Real Estate Transactions: Why Is It Important to Receive Legal Guidance from a Lawyer Proficient in the Field?

A real estate transaction is, in most cases, the most complex and significant transaction a person can undertake in their lifetime in terms of economic scope and legal complexity. Given the great importance of the transaction, it requires conducting a range of preliminary legal and planning checks through a professional, skilled, and experienced lawyer who will accompany the transaction until its completion and registration with the Land Registry Office (Land Registry extract) or any other body where rights registration is conducted. Professional legal guidance from an experienced real estate lawyer can save the party in a real estate transaction a lot of money, time, and distress.

Mandatory Checks Before Engaging in a Real Estate Transaction

While a real estate transaction includes all the standard components of a regular transaction, such as negotiation, intention, specificity, good faith, etc., it also includes additional and unique components such as real estate use, real estate tax issues, building rights, specific obligations related to real estate transactions, and more. Therefore, before engaging in a real estate transaction, it is recommended that a professional lawyer specializing in real estate conduct a range of preliminary checks regarding the property.

As part of the preliminary checks, the lawyer will conduct for the client, they will verify the seller's identity and ensure they are registered as the owner of the property, examine the Land Registry extract, obtain rights approvals from the Israel Land Authority and the housing company, obtain the shared house plan from the Land Registry, examine the existence of warning notes in favor of third parties, mortgages, and various liens on the property, examine the property's file at the local authority, and conduct additional checks as needed.

Planning Checks with the Local Planning and Building Committee

In the planning aspect, the lawyer will conduct a range of checks with the local planning and building committee, examining whether unauthorized construction has been carried out on the property and checking for building deviations. Additionally, these checks can determine the property's current planning status, review the property's plans, check its building percentages, and whether there is an owner's debt to the local authority, demolition orders, and the like.

A professional and skilled lawyer will report to the client they represent about relevant information discovered during the preliminary checks conducted. In many cases, after conducting preliminary checks regarding the property, findings may be revealed that could affect the transaction's feasibility, determine whether the transaction will proceed, influence the property's price, and more. It should be clarified that before engaging in a real estate transaction, both parties are entitled to compare the property's value to the prevailing market prices. A party wishing to obtain a professional, accurate, and reliable valuation is entitled to seek the services of a certified real estate appraiser or a broker familiar with the real estate field in the specific area where the property is located.

Real Estate Taxation - Why Is It Important to Use the Services of a Professional and Skilled Lawyer?

Since a real estate transaction involves various types of tax liabilities, it is important that the representing lawyer be knowledgeable in real estate taxation and conduct all necessary checks regarding development and improvement levies, the amount of purchase tax and\/or capital gains tax, eligibility for full or partial tax exemptions, capitalization fees, and more. Professional tax planning and thorough execution of preliminary checks can significantly affect the transaction's feasibility and, in many cases, even determine whether it will proceed. If the real estate property is an apartment in a shared house, the lawyer will examine the shared house documents to review the regulation of rights in the shared house and the relationships between the apartment owners in the building.

After completing the preliminary checks, the parties' lawyers will exchange drafts of the sale agreement. According to the customary practice in legal practice, the seller's lawyer will prepare the initial draft of the agreement since the property seller is familiar with all the relevant details concerning the property.

The buyer's lawyer will review the draft agreement after conducting the preliminary legal checks. It should be clarified that the checks conducted by the buyer's lawyer will be used in case they need to provide data to the bank for obtaining the loan secured by a mortgage. After the lawyers representing the parties have agreed on the final wording of the agreement, they will need to prepare the agreement's appendices, including a power of attorney for rights registration, sale deeds, requests for registering a warning note, and more.

In the next stage, the parties to the transaction will sign the sale agreement, with the lawyers representing them preparing the agreements for signing in advance, identifying them using official identification means, and ensuring that all copies of the agreement contain the parties' full and correct signatures.

Implementation of the Agreement and Bringing It into Action

After signing the agreement, the parties will need to start implementing it and bringing it into action. This stage begins with making payments to trust until the conditions for transferring the funds to the seller are met, registering a warning note, clearing the seller's mortgage subject to receiving a letter of intent from the lending bank, and registering a warning note in favor of the bank by the buyer.

After the parties have signed the agreement, the process of accompanying the buyer with the bank from which they took the mortgage will begin. Subsequently, the lawyer will report the transaction to the tax authorities via an online system. In the next stage, the lawyer will need to ensure that the final payment for the property is indeed made against the delivery of possession of the property to the buyer. At the time of delivery of possession of the property, the seller will need to provide the buyer with the registration documents and the tax approvals through which the apartment will be registered in the buyer's name.

Close to the time of delivery of possession of the property, the seller's lawyer will need to contact the municipality and the local planning and building committee to check the payment of the improvement levy and whether there are any ongoing debts on the property to obtain approval for transferring the rights in the property to the buyer. Once all transfer approvals have been received, the buyer's lawyer will need to register the property in the buyer's name with the Land Registry Office, the housing company, or the Israel Land Authority, depending on the relevant circumstances. On this occasion, the mortgage in favor of the bank from which the loan was taken by the buyers will also be registered, using mortgage documents that the lawyer will ensure to obtain in advance.

Engaging in a Real Estate Transaction Requires Legal Guidance from a Professional, Skilled, and Experienced Lawyer

The recommendation for a person interested in conducting a real estate transaction is to contact a professional, skilled, and experienced lawyer in the field of real estate transactions as soon as possible. Since the preliminary legal checks are complex to perform and require understanding, legal knowledge, expertise in real estate law, planning and building law, tax law, lien law, banking, and more, it is advisable to contact a professional lawyer at the initial stage of the real estate transaction.

Professional legal guidance from a lawyer can save the client a lot of money and prevent them from being involved in disputes arising from the concealment of relevant information regarding the property.

Another piece of advice for those interested in conducting a real estate transaction is to avoid signing a preliminary agreement or memorandum of understanding before consulting with a lawyer. Signing a preliminary agreement or memorandum of understanding before consulting with a lawyer who conducts all the necessary preliminary checks as mentioned may impose a range of obligations on the parties to the transaction and cause them distress, heavy financial expenses, and a waste of valuable time.