Amendment to the Sale of Apartments Law Strengthens the Monetary Protection of the Purchasers
The Sales (Apartments) (Assurance of Investments of Persons Acquiring Apartments) Law, 5735-1974 is a consumer law which provides arrangements the purpose of which is to protect the monies which a purchaser of a new apartment pays to the seller of the apartment and to ensure that in the event of failure of the transaction the purchaser’s money will not go down the drain. So, for example, the law provides that the seller shall not receive from the purchaser – on account of the price of the apartment – an amount in excess of 7% of the price to be paid for the apartment if no security is given in respect thereof. The law provides for 5 means of security: (i) bank guarantee; (ii) insurance; (iii) pledge; (iv) caution; (v) ownership. The security most widely used is a bank guarantee and this is given, generally, when the project is accompanied by bank support.
