Lawyer’s Role in Real Estate Transactions in Israel compared to France

Lawyer’s Role in Real Estate Transactions in Israel compared to France

August 29, 2017

In France, calling upon a notary is essential in a Real estate transaction. His role is to advise the parties to the transaction, draft the appropriate documentation and effect the transaction.  In Israel, the profession of notary as it is known in Europe does not exist (the role of the notary is limited to authentication of signatures and documents), and all the steps associated with the monitoring of Real estate transactions are reserved for lawyers who prepare documents while effecting the transaction is made by government officials at the Israeli Land Registry (known as "Tabu"). It is therefore essential for European residents interested in purchasing real estate in Israel to understand the role of the lawyer and the importance of approaching an experienced lawyer before executing any document.

Many disputes between lawyers and clients are related to the real estate field. This maybe due to the fact that many new and unexperienced lawyers enter the work market every year and the real estate field seem to be an easy field to enter the profession.  The law in Israel does not require any experience or sufficient compulsory professional insurance in respect of damages which may result from a fault on the part of the lawyer and so many young lawyers offer to do the job for a competitive (or, in fact, too low) price so as to receive the work, but do not really have the backing (experience-wise or insurance-wise) of an experienced law firm. The professional negligence law suits are soon to follow…

Many are not aware of the fact that under Israeli law a term sheet of even a letter of intent may be deemed a real estate transaction.  Thus, people sometime approach a lawyer only after such were signed and find themselves in a position where they have already obligated themselves to things they did not mean or that may have legal implication.  Thus, it is important not to sign any document or pay any amount on account of a transaction until an experienced lawyer reviewed the transaction.

There are three main steps in a real estate transaction in Israel: the preliminary step which requires obtaining data from the official registries to verify that the property is not burdened with any right of third parties (and preferably also obtaining an appraisal of the land which will also check the planning status of the asset); negotiating and drafting of the set of documents of the transaction, custom made for the client and the asset (and here too, unexperienced lawyers usually use templates that do not always fit, especially in the case of non-Israeli purchasers); and the reporting and recording of the transaction (which is a lengthy stage that can take 6 months or more). In many cases the lawyer will also act as an escrow agent to hold funds until certain documents are received from the seller or the tax authorities.

The lawyer can represent both seller and purchaser, which can lead to saving of fees at the first stage, but might lead to disputes later, whether due to conflicts of interest or due to the fact that the documents were reviewed only by one "set of eyes" and mistakes were thus not picked up on time.

To summarize, it is important to be represented by an experienced lawyer from a law firm with experience in the real estate field and a proper professional liability insurance.  It is also important to contact the lawyer at a very early stage of the transaction to ensure that all procedures are duly done.