INS AND OUTS OF BUYING A HOME IN JERUSALEM: How it Differs from Other Countries
by Sarah Eiferman
So you’d like to purchase a home in Jerusalem?
Please be aware that just as the land of Israel has its own special atmosphere, buying property in Israel has its own individual rules. Learn the ins and outs before you begin your search.
LAND OWNERSHIP
As a result of historic periods when Jerusalem came under the rule of other countries, types of land ownership or registration vary in Israel’s capital. The two main categories relevant here are freehold and leasehold ownership. Freehold ownership is full ownership of your home and the plot of land in perpetuity, while leasehold ownership requires a lease renewal at intervals according to the specific contract time for that property.
CITIZENSHIP REQUIREMENTS
Another Jerusalem peculiarity is the stipulation in some areas, such as Yemin Moshe and the Old City, that home owners be not only permanent residents but citizens of the State of Israel. Often a commitment to make aliyah within 18 months is acceptable.
While a percentage of non-resident buyers is allowed, all potential owners must be approved by the development company. This stipulation may seem odd at first, but is easily understood when seen in terms of preserving active daily life in these special, dynamic neighborhoods.
BEFORE YOU BUY
In Israel, all negotiations and investigations are completed before a contract is signed. Therefore, make sure you have all issues and requests resolved and written into the contract.
In Israel property is sold on a “bare walls” basis, unless otherwise specified in your contract. While kitchen and bathroom cabinets commonly remain, appliances, light fixtures, freestanding closets and all other accessories or fittings must be negotiated before the property sale contract is signed. With EIFERMAN PROPERTIES, fastidious attention is always paid to detailing these specifications before signing a binding contract.
RECOMMENDED PROFESSIONAL RESOURCES
Three professionals EIFERMAN strongly recommends consulting before you make a final decision on any property are an engineer, an architect and a real estate attorney.
Regardless of the outward appearance or the age of the property, an engineer will inspect the condition of the plumbing and electrical system of your future home. He will check for possible past problems with water leakage as well as impending problems. He will verify the structural stability of the roof and the overall condition of the building.
An architect can most easily verify planning and zoning issues, which are especially important in regard to building expansion rights.
As the contract for purchase of a property is a legally binding document, it is wise to use a local attorney who specializes in real estate transactions. Your attorney will ascertain existing ownership of the property in which you are interested, and whether it is unencumbered by legal problems.
PURCHASE CONTRACT: “MUST-INCLUDES”
The three definitive components of your contract are price, vacancy date and a payment schedule with a final closing date. Your Eiferman agent will assist you in negotiating these points for your purchase contract.
UNDER CONSTRUCTION
There are several issues treated differently when purchasing a property under construction. First, in the contract payments will be linked to the stages of building construction. Second, with this type of property, the buyer pays 1.5% of the purchase price to the developer’s lawyer, in addition to his/her own lawyer’s fee. Finally, technical specifications such as additional plumbing and electrical points must be negotiated before signing the contract. After the contract is signed, all changes will involve an additional cost.
FOR YOUR PROTECTION
At times, buyers may want to sign a zichron devarim (binder note) and pay a nominal deposit to ensure that the owner does not sell the property to someone else before the contract is signed. Attorneys are opposed to this type of written agreement, which is considered a contract, because they have not had the opportunity to verify ownership and any liens on the property. An attorney should always advise regarding the wording of this note, which should include the clause that this note is binding subject to the approval of the buyer’s attorney and an engineer’s report.
The purchaser is protected by legal registration as the buyer by a cautionary note, when immediately after the contract is signed, the lawyer will register your name as the buyer. This prevents the owner from selling to additional buyers before the closing.
CLOSING COSTS
In addition to the purchase price of the property, there are closing costs ranging from 8 to 10% of the purchase price. These include property purchase tax, brokerage commission, legal fees, engineer inspection fees, mortgage initiation fees and exchange rate differentials. Your EIFERMAN PROPERTIES agent can explain these costs to you in detail. Please note that in Israel, the law stipulates that both the seller and the buyer pay real estate commission.
We hope this general overview has been helpful for you. Please visit www.eifermanrealty.com for additional real estate information and for property listings in Jerusalem and other areas of Israel.
Looking forward to helping you find your home in Israel!
SARAH EIFERMAN is the owner of EIFERMAN PROPERTIES LTD, an Anglo-friendly Jerusalem real estate firm. With over 23 years of experience plus membership in the Jerusalem Multiple Listing Service and the Chamber of Real Estate Brokers, Sarah has her finger on the pulse of the Israel real estate scene. She and her staff of professional licensed agents will be happy to help you buy, rent or sell property in Israel.
Contact Sarah at:
+972-2-651-4030
