In short
What does a lawyer do when you sell an apartment in Israel?
The lawyer checks the Land Registry rights, the mortgage and the capital gains tax before you commit, drafts a sale agreement in which the money arrives before the seller gives up the rights, and reports to the Israel Tax Authority within 30 days of signing. Then the lawyer obtains the tax and municipal approvals and registers the apartment in the buyer's name.
Before Listing: What the Seller Checks
Start with a Land Registry extract (nesach tabu), or a confirmation of rights from the Israel Land Authority or the housing company when the apartment is not registered at the Land Registry. Check that the rights are registered in the names of all the sellers, and whether a mortgage, an attachment or a warning note in someone else's favor is registered. A gap between the registration and the actual situation, such as an addition built without a permit or a storage room that does not belong to the apartment, usually comes out in the buyer's due diligence, and it is better that you find it first.
When there are several owners, for example heirs or a separated couple, the sale requires the consent of all of them, and each of them signs the agreement. When they do not agree, the route is a court action for dissolution of joint ownership.
Check the taxes as well. The seller pays capital gains tax (mas shevach), and sometimes there is an exemption. If a betterment levy applies to the apartment because of an approved plan, it is collected on realization, and a sale is a realization. Both payments affect the price that is worth accepting. We cover the calculation and the exemptions on the page Capital Gains Tax (Mas Shevach).
The Memorandum and the Sale Agreement
Do not sign a memorandum of understanding (zichron dvarim) or a broker's form before a lawyer has seen it. Under section 8 of the Land Law, 5729-1969, an undertaking to make a real estate transaction requires a written document, and a short document that includes the property, the parties, the price and the dates may bind like a contract. A seller who signed in haste may find they committed to a price or a date they did not intend.
In the sale agreement the seller makes sure of three things: that the money arrives before they give up the rights, that their mortgage is removed out of the buyer's money, and that they have a way to cancel the deal and delete the warning note if the buyer does not pay. Payments are set in stages: part on signing, part after a warning note (he'arat azhara) is registered in the buyer's favor, and the balance against delivery of possession. Hand over the keys only once the full price has been paid, or deposited in trust as the agreement provides.
The seller must also disclose to the buyer what they know about the apartment. Section 16 of the Sale Law, 5728-1968, makes the seller liable for a non-conformity arising from facts they knew or should have known and did not disclose, even when the contract says the apartment is sold "as is." We discuss this in the article Defects in a Second-Hand Apartment.
A Mortgage on the Apartment
Many apartments are sold with a mortgage registered on them. The seller asks the bank for a letter of intent, which states how much must be paid to discharge the loan and undertakes to delete the mortgage after payment. The agreement provides that part of the buyer's payments goes directly to the seller's bank until the loan is repaid.
When the buyer takes a mortgage, their bank also needs security, so the seller signs an undertaking to register a mortgage in favor of the buyer's bank. The seller's lawyer coordinates between the two banks and checks that every transfer reaches its destination.
After Signing: Reporting, Approvals and Registration
The seller and the buyer report the transaction to the Israel Tax Authority within 30 days of signing, even when claiming an exemption. The declaration is filed online, usually by the lawyer. Capital gains tax, if any, is paid within 60 days, except where the law allows it to be deferred.
To register the apartment in the buyer's name, you need approval from the Tax Authority that the taxes were paid or an exemption granted, and approval from the local authority that nothing is owed to it on the property, such as municipal tax (arnona) and levies. In a city, the approval is issued under section 324 of the Municipalities Ordinance. Finally, the mortgage and the warning note are deleted, and ownership is registered in the buyer's name. Until then, the transaction is not complete from the seller's side.
What the service includes
- Checking the Land Registry extract, mortgages, attachments and notes
- Checking capital gains tax, exemptions and betterment levy before signing
- Reviewing or drafting the memorandum and the sale agreement
- Coordinating the mortgage payoff with the bank
- Reporting to the Tax Authority and obtaining tax and municipal approvals
- Registering the transfer and deleting the mortgage and the notes
When to contact us
- You decided to sell an apartment and received an offer
- A broker asked you to sign a memorandum of understanding
- A mortgage is registered on the apartment
- It is unclear whether you will pay capital gains tax on the sale
What to bring to the meeting
- A Land Registry extract or a confirmation of rights
- The original purchase agreement
- Mortgage details and a letter of intent from the bank
- Municipal tax bills and documents on renovations and improvements
Selling an Apartment throughout Israel
The firm represents clients from all over Israel: Jerusalem and the Shfela, Be'er Sheva, Ashdod and Ashkelon, Haifa and the North, the Sharon and Gush Dan. Meetings take place at our two Modiin branches, at the WE Towers branch in Tel Aviv or by video call, and documents can be sent in advance on WhatsApp. We represent clients in the courts, the Labor Courts and before planning committees throughout Israel. How we work with clients across Israel.
Frequently asked questions
Do I need a lawyer to sell an apartment?
The law does not require one, but the declaration to the Tax Authority is filed online, usually by a lawyer, and the sale agreement determines when you receive the money and what happens if the buyer does not pay. So it is customary for each side to have its own lawyer.
When is the sale of an apartment reported to the Tax Authority?
Within 30 days of signing the agreement. Both the seller and the buyer file a declaration, and the duty to report applies even when claiming an exemption from capital gains tax.
Can I sell an apartment that has a mortgage on it?
Yes. The seller asks the bank for a letter of intent with the payoff amount, and the buyer transfers part of the payments directly to the bank until the loan is repaid. After repayment the bank deletes the mortgage.
Is a memorandum of understanding binding?
It may be. A signed memorandum that includes the essential terms of the deal, such as the property, the price and the dates, can be treated as a binding contract even if the parties meant to sign a detailed agreement later. So show it to a lawyer before signing.
How much does a lawyer for selling an apartment cost?
The fee is set in advance in a written fee agreement, according to the scope of the work: whether there is a mortgage, whether the apartment is registered at the Land Registry, and whether an exemption or an objection must be handled. Legal fees are an allowable deduction in the capital gains tax calculation.
