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The US-Israel Legal Review 2019 101
in the meantime) serious damages. The parties
therefore execute an agreement that precludes
them from withdrawing from their understandings.
Only then, once they are mutually committed,
is the buyer given time to perform all necessary
investigations: ascertaining that the seller indeed
has good title, checking that the propertywas built in
accordance with required permits, and discovering
material defects, liens or violations. Some of these
examinations are performed by the buyer’s lawyer,
and some through a title company.
The title company makes sure that title to the
property is legitimate and clear, such that the
purchaser can be certain that once the transaction
closes and he has paid the consideration in full, he
can be recognized as the lawful owner. In order to
assure title validity, the title company conducts a
thorough search through the records of theproperty.
The title company ascertains that the seller is indeed
the lawful holder of the deed and that there is no
third party who may claim full or partial rights to
the property.
As part of this search, the title company checks for
outstanding mortgages, liens, judgments or unpaid
taxes and for any restrictions, easements, leasehold
rights or any other matter that may adversely affect
the title. The title company also checks whether
neighbors or others are trespassing or squatting or
whether any person has been given a right of use
that is liable to adversely affect the title.
Once title has been cleared, the title company
issues an insurance policy that protects lenders and
owners against claims or legal costs they may incur
in connection with title-related disputes.
There are no title companies in Israel. Moreover,
contrary to the standard course of dealing in the
US, the legal approach here is that the buyer should
perform all investigations before the purchase
agreement has been signed. The agreement is
binding only upon signing. Most of the payments
are transferred directly to the seller, shortly after
execution, and only certain amounts are held in trust
against specific payments that the seller must make
(which if not paidwould preclude registration of title
in the buyer’s name).
Since in Israel too, either party may withdraw
until a binding agreement has been signed, and since
there are no title companies in Israel, it falls upon the
lawyers to perform the preliminary examinations.
Only some of these examinations are legal, and
since they involve several authorities and must be
performed within a very short time, not all lawyers
strictly perform all of them.
A summary of the main investigations that need
to be carried out ahead of signing an agreement
for the purchase of real estate property in Israel is
provided below. This is not an exhaustive list, and
a lawyer who specializes in real estate should be
consulted in order to make sure that the necessary
examinations are conducted as required for that
type of property.
LEE MAOR
PARTNER
The legal approach in Israel is
that the buyer should perform all
investigations before the purchase
agreement has been signed.