Legal Updates

In some cases it may be possible to exercise a lien on purchased land even if not yet recorded on the name of the purchaser

November 18, 2021

A person purchased land from his father with a cautionary note recorded but consideration left unpaid and the asset not recorded on his name.

The Supreme Court held that a creditor of the purchaser may exercise a lien on the property. Israeli Law stipulates that one may impose a lien on property which has not yet been recorded under the name of the purchaser at the Land Registry and there is only a cautionary note in his favor, whether the purchaser holds the property or not. In addition, a lien may be recoded even if no cautionary note is recorded in favor of the purchaser if there is a risk concealment of assets, whether to a "far" third party or a "close" third party, such as a family member. Here, the cautionary note was recorded in the name of the purchaser who held it for a long period and acted as an owner of the property, with the seller never seeking to terminate the agreement due to the non-payment of consideration and is willing to complete the transaction, subject to payment of the consideration. Thus, the creditor of the purchaser may act to sell the property provided that the consideration received will first be used to pay the seller and then the remainder may be used to cover the debt.