Just Before You Sign:
Everything You Need to Know About Your Contract
So you've picked out your new apartment and now it's time to seal the deal. Before you get caught up in daydreaming about interior design, pay close attention to one of the most important steps: signing the contract. Read on for all the information you need about the different parts of the contract, securities for the transaction, and the developer liability.
The new apartment's contract of sale outlines all the details of the transaction, including apartment specifications, payments, securities, occupancy dates, and developer's responsibilities. Both you and the developer are bound by the contract of sale and therefore it's best to have your own lawyer who can be in charge of the negotiations and the final contract signing. Remember, the developer's lawyer does not represent you.
What is Included in the Contract of Sale?
According to the Sales Law (Apartments), contracts for apartment purchases must include the following documents:
Contract of Sale: the agreement between you and the developer.
Property Plans: floor plans of the apartment and the building's basement, ground floor, residential floors, and roof.
Specifications: detailed written specifications, including descriptions of the building, the apartment, and all the shared spaces, as outlined in the Sales Ordinance (Apartments). The developer cannot remove any part of this text, because its purpose is to inform the purchaser of everything that the apartment does or does not include.
Appendix of Purchasers' Rights: the developer is required by law to attach a document that details the purchaser's legal rights in accordance with the Sales Law (Apartments) and to notify the purchaser about the lack of financial backing (if relevant).
Special Appendices: any document that highlights topics specific to the project, such as building permits, planning changes, and so forth.
Securities for the Transactions
According to the Sales Law (Apartments) (Assuring Apartment Purchasers' Investments), the contractor cannot ask for more than 7% of the apartment price before insuring the customer's money.
The law defines three securities options:
Bank Securities: based on the total amount paid for the apartment. Make sure that you only make your payments into the bank account that is providing the developer with credit for the project. For a project with financial backing, the payment is made using a voucher provided by the financing bank.
Insurance Policy: similar to a bank guarantee, the developer insures the purchaser's money through an insurance policy.
Registration of a cautionary note in the buyer's favor in the Land Registry: make sure this cautionary note precedes any comment, attachment, lien, or rights of a third party.
Receiving the Apartment from the Contractor
When signing the contract, make sure that it mentions exactly when the purchaser will receive the key to the apartment. By law, the developer can delay the handover by sixty days, without giving any reason or compensation. But on the sixty-first day, the purchaser is entitled to receive compensation, from the first day of the delay onward.
Similarly, the law sets aside two separate periods to deal with any problems that may arise in the apartment:
Inspection Period: during this period, the contractor is obligated to fix a variety of problems in the apartment, as long as they were not clearly caused by the buyer. The Inspection Period varies between one and seven years, depending on the type of problems, as outlined in the Sales Law. For example: problems with the pipes are covered for two years, and problems with flooring are covered for three years.
Warranty Period: begins immediately after the Inspection Period and continues for three years. During this period, the residents are responsible for proving that any problems were caused by the contractor.
*The information provided here is not a substitute for consultation with your own attorney.