Guide to 10 Common Mistakes in Home Purchase — Avoid Them Now

Why Is It Important to Understand Mistakes in Apartment Purchasing?

Purchasing an apartment is not a simple transaction. It involves legal inspections, engineering inspections, insurance inspections, and management of many regulatory matters. Any mistake, however small it may seem, could lead to hidden costs, financial losses, or even long-term legal consequences.

Mandelboim, Gor, Witzman-Gor and Partners, Law Firm, which has specialized in real estate and property law since 2008, has guided hundreds of apartment buyers through the process. Based on this experience, we present the 10 most common mistakes and how to avoid them.

Apartment Purchasing Mistakes — The Complete Guide

In the following sections, we will detail each mistake, explain its consequences, and propose ways to correct or prevent it.

1. Failure to Check the Taboo Registry Before Signing

One of the most critical mistakes is failing to check the taboo registry (the registration at the Land Registry Office) before signing a sales contract. The taboo registry indicates the rights holders in the property, the rights themselves (ownership, mortgages, use rights, etc.), and all encumbrances on the property (mortgages, third-party rights, etc.).

If you do not check the registry in advance, surprises may arise at the closing stage. For example, it may turn out that the seller does not have full rights to the property, or that there is an unresolved mortgage, or that there is a third-party right on the property. Any of these could delay the transfer or cause additional costs.

What to do: Ask your attorney to review the updated taboo registry before signing the sales contract. Ensure that the seller is the sole owner, that there are no active mortgages, and that all rights stated in the contract match the registry.

2. Neglecting Engineering Inspection of the Property

Many apartment buyers skip engineering inspection to save costs, or assume that a previous buyer's inspection will suffice. This is a significant mistake.

A thorough engineering inspection of your own reveals structural issues, electrical problems, plumbing issues, insulation defects, ceiling damage, foundation problems, and HVAC issues that may arise in the future. There are problems that could cost tens of thousands of shekels to repair. If you are unaware of these issues before purchase, you will bear the burden of repairs.

What to do: Hire a licensed and experienced building engineer to conduct apartment purchase inspections. Request a detailed report with photographs. If issues are found, use them as a bargaining point in the transaction or as a condition for cancellation.

3. Misunderstanding Hidden Costs (Capital Gains Tax, Purchase Tax, Commissions)

Many apartment buyers focus on the apparent purchase cost (apartment price) and forget about significant additional expenses.

These costs include: (a) capital gains tax — a tax on the profit between the seller's selling price and the price he originally paid (or assessed land value); (b) purchase tax — a tax on the purchase itself (varies by marital status and property status); (c) commissions for attorney, appraiser, and bank; (d) registration costs in the taboo; (e) ownership insurance; (f) engineering and security inspection costs.

In some cases, these costs may reach 15–25% of the base purchase cost. If you do not plan for them, you will face a severe financial shock.

What to do: At an early stage, ask your attorney for a calculation of all expected costs. Include this in your overall budget. Build in allowances for future tax rate and legal changes.

4. Signing a Sales Contract Without Legal Advice

A real estate sales contract is not a standard and simple document. It contains many legal terms, such as closing date, payment conditions, agreements regarding property encumbrances, seller's warranties, right of return, etc. If you signed a contract without legal advice, you may have fewer rights than you could have had.

For example, a contract may contain a clause that limits the seller's liability for certain defects, or that limits your right to cancel if certain conditions are not met. If you did not understand this clause, it may be difficult for you to defend yourself later.

What to do: In any case, obtain legal advice before signing a sales contract. An attorney will ensure that the contract reflects your agreements with the seller and will protect your rights.

5. Failure to Check Third-Party Rights on the Property

Check all third-party rights on the property. This may include housing rights (for example, a family member of the seller who has the right to live in the property), right of way (a neighbor's right to use part of your property), or other rights registered in the taboo.

If you buy a property with such rights, you also buy the liabilities associated with them. For example, if there is a housing right on the property, you cannot easily evict the rights holder — it requires legal proceedings.

What to do: Check the taboo with full updates. If there are third-party rights, ask the seller about them. If these rights are not acceptable to you, ask the seller to remove them before closing.

6. Failure to Check the Condition of Shared Property and Management Fees

If you are buying an apartment in a multi-family building, you are also buying a share in shared property (the building, garden, staircase, etc.). This means you are responsible for contributing to the costs of maintenance, repairs, and insurance of the entire building.

If you do not check the current management fees, the planned expenses of the shared property, or the financial condition of the shared property, problems may arise unexpectedly. For example, a shared property may owe millions for repairs to external walls, which will translate into high additional costs for you as an apartment owner.

What to do: Request from the seller (or the building management) a comprehensive report on management fees, planned expenses, and the financial status of the building. If there are issues, request a discount or renegotiate the agreement.

7. Failure to Verify Legal Compliance of the Building (Registration, Permits, TAMA 38)

Buildings in Israel must be properly registered in the Land Registry, with valid building permits. In some cases, buildings are constructed without permits, or permits have not been properly completed, or the building is not properly registered in the Land Registry.

If TAMA 38 regulations (urban renewal) apply to the building, they have implications for your rights as a property owner and also for your ability to sell or lease the apartment in the future.

What to do: Ask your attorney to verify the building's registration in the Land Registry, the building permits, and all aspects of TAMA 38 (if relevant). Ensure everything is in order before purchasing.

8. Failure to Verify Mortgage Insurance Status (If You Purchased with a Mortgage)

If you are financing the purchase with a mortgage, your bank will require insurance on the property as collateral. If you do not verify the insurance terms, it may turn out that you are not covered in certain scenarios, or that the insurance does not fully cover the damage.

For example, property insurance may not cover natural disasters, or it may only cover a portion of the property's value.

What to do: Request full details from the bank regarding insurance requirements. Work with a licensed insurance agent who will verify that the insurance covers all important risks.

9. Failure to Plan for Property Division or Parcellation (If Relevant)

In some cases, property buyers are interested in dividing a property (for example, to sell part of the land) or performing parcellation (division of a property into separate properties). If you plan to do this in the future, it is important to check in advance whether it is possible, what the legal requirements are, and what the costs are.

If you do not check this in advance, it may turn out in the future that parcellation is not possible, or it requires lengthy and difficult legal procedures.

What to do: If you plan to parcellate or divide a property, ask your attorney about the options, requirements, and costs. Include this in your overall plan.

10. Failure to Verify Commercial or Industrial Rights on the Property (If You Purchased a Commercial Property or Property with a Commercial Component)

If you purchased a property that has a commercial component (for example, an apartment with a shop on the ground floor), or if you purchased a purely commercial property, it is important to verify all commercial rights on the property.

For example, if there is a long-term lease right on the shop, or if there is a right of way for commercial purposes, this affects the property's value and your ability to use it as you wish.

What to do: If you purchased a property with a commercial component, verify all commercial agreements, lease rights, and all related obligations. Ensure that the property suits your future plans.

How Professional Legal Representation Can Save You from These Mistakes

Professional legal representation in the apartment purchase process is an investment in yourself. A real estate and land law attorney with experience will examine all legal aspects of the transaction, identify potential risks, and help you navigate the process safely.

Mendelboim, Gor, Witzman-Gor and Co. has been engaged in real estate and land law since 2008. We have guided hundreds of apartment buyers through complex processes, from simple transactions to complex TAMA 38 and urban renewal projects.

Our real estate and property law services include:

• Verification of Land Registry documents and property rights: We examine the property's registration, ownership rights, mortgages, third-party rights, and all encumbrances on the property.
• Sale Agreement review: We read, analyze, and amend the sale agreement to protect your rights.
• Building management and condominium review: We examine the building's condition, management fees, and all planned expenses.
• Cost and tax handling: We calculate all expected costs, including capital gains tax and purchase tax, and help you plan your budget.
• TAMA 38 aspects handling: If you purchased an apartment in an urban renewal project, we handle all legal aspects related to TAMA 38.
• Transaction closing assistance: We represent you at all stages of closing the transaction, from initial inspections through final Land Registry transfer.

Additionally, we offer a free initial consultation, so you can understand your needs and discuss the best way to proceed.

Comparison Table — 10 Mistakes and Their Consequences