Legal Updates

Marking a draft as requiring a signature to be valid prevents deeming it a binding

July 20, 2021

A potential purchaser of an apartment demanded that the sellers sell him the apartment even though the agreement was not actually signed after the sellers withdraw from the transaction in the last moment due to tax considerations.

The Court dismissed the claim and held that the purchase agreement could not be enforced without the parties' signatures. A real estate purchase agreement must be made in writing. However, the actual signing of the purchase agreement is an evidentiary requirement only and in some cases the Court may hold the agreement binding even though it was not actually signed. Here, the sellers withdraw from the transaction in the very last moment after discovering on the day scheduled for signing that execution of the transaction may entail an improvement levy of hundreds of thousands of shekels. Although the parties negotiated for a month and a half with no "open" issues remaining and even showed up to a closing meeting where they were supposed to sign the agreement, the parties set the manner of completing the transaction by personally signing it as all drafts explicitly stated: "for purpose of negotiations - does not constitute an offer - subject to the seller's approval and the signing of a binding contract". Therefore, the last draft cannot be deemed a binding contract and the sellers cannot be obliged to carry out the transaction and all one may demand is damages.