Apartment Lawyer in a Private Company in Ramat Gan

What are Company Apartments and How Do They Differ from Fully Owned Apartments?

A company apartment (also called a "mortgaged company apartment" or "real estate company apartment") is an apartment owned by a private company, with the right to occupy it granted to residents through a housing loan — a usage right without full ownership of the property. This is a completely different legal model from purchasing an apartment with full ownership on the land registry.

In a company apartment, you do not purchase the property itself, but rather purchase shares in the company that holds the property and receive a housing loan (usage right). The practical meaning is that your housing is legally protected, but the property itself is registered in the company's name. This may affect future sale rights, mortgages, capital gains tax, and inheritance.

In recent years, company apartments have become a popular model in urban renewal projects, new construction, and shared housing complexes. They allow developers and investors to maintain control of the property while granting long-term housing rights to residents.

The Difference Between a Company Apartment and a Fully Owned Apartment

• Legal Ownership: Company apartment — the private company owns the property; fully owned apartment — you are the full owner and the property is registered in your name on the land registry.
• Housing Rights: Company — housing loan (usage right); fully owned — full ownership and complete freedom to lease, sell, or transfer.
• Capital Gains Tax: Company apartment — capital gains tax may be lower or not applicable (depending on circumstances); fully owned — capital gains tax typically applies to any increase in property value.
• Mortgage: Company — more difficult to obtain a mortgage, and if approved, at higher interest rates; fully owned — standard and flexible mortgage options.
• Future Sale: Company — you sell shares in the company and depend on the company's consent or other owners; fully owned — free sale to any buyer.
• Inheritance: Company — shares in the company pass through inheritance; fully owned — the property itself passes through inheritance.

Each model has advantages and disadvantages, and the decision depends on your circumstances, your future plans, and your financial situation. This is why no one can be advised on this matter without examining all the details.

How Does the Mandelbaum, Gor, Witzman-Gor and Partners Law Firm Assist in Company Apartment Transactions?

Our firm has specialized in real estate and property transactions since 2008. When you are considering purchasing a company apartment, we provide comprehensive legal representation at every stage of the process — from the initial review of the offer through contract execution and registration with the land registry office.

Stages of Our Legal Representation

1. Offer and Purchase Agreement Review: We examine the contract terms, the housing rights granted to you, the duration of the housing loan, conditions for termination or cancellation, and all legal implications. We identify problematic clauses and negotiate with the seller or developer on behalf of the client.
2. Land Registry Certificate and Documentation Review: We verify that the property is registered in the land registry under the company's name, that there are no liens or encumbrances on the property, and that all information corresponds to the contract. We examine the company bylaws, share register, and existing agreements between shareholders.
3. Housing Rights and Obligations Review: We examine the housing loan in detail — whether it is mortgaged, whether it depends on payment of taxes or maintenance, and what happens if you fail to pay. We also verify your obligations as a resident in the company (housing fee, shared maintenance, etc.).
4. Economic-Legal Review: We examine the company's stability, the property's condition, and the economic risks associated with the transaction. We also inform you of tax implications (capital gains tax, purchase tax) and insurance rights.
5. Negotiation and Execution: If necessary, we negotiate with the other party to improve the terms. We then guide you through contract execution and submission of the registration request to the land registry office.
6. Registration Support: We handle everything necessary to guide the request through the land registry office and ensure that the shares and housing loan are properly registered in your name.

Every real estate transaction is unique, and the details vary depending on the property plan, the company's financial situation, and the relationships between shareholders. Therefore, we examine each case individually and tailor our representation to your specific needs.

Risks You Should Be Aware Of

Purchasing an apartment in a private company involves legal and financial risks that do not exist in a fully owned apartment. It is important that you understand them before signing a contract.

Company Financial Risk

The company holding the property is a separate legal entity. If the company enters bankruptcy, insolvency, or legal restructuring, your housing rights may be at risk. If the property is sold in a bankruptcy proceeding, you may be evicted from the apartment or lose your housing rights. This is a significant reason to examine the company's stability, debt level, and ability to be managed properly.

Difficulties in Future Sale

When you want to sell the apartment in the future, you are not selling a property, but rather shares in a company. Many potential buyers will hesitate to purchase shares in a company because this involves legal and financial risks that are higher than buying a regular apartment. This could reduce the number of buyers, lower the sale price, or extend the sale process.

Complicated Mortgage

Banks typically hesitate to provide a mortgage for an apartment in a company. If a mortgage is approved, it is usually at higher interest rates and a lower amount than for a fully owned apartment. This could make the purchase financially unattractive.

Appreciation Tax and Tax Considerations

Appreciation tax on an apartment in a company can be more complicated. In some cases, it does not apply at all (if the housing loan is considered a "right of use" rather than "property"), but in others it does apply. This requires expert legal advice to understand your specific situation.

Risks in Maintenance and Joint Obligations

You may be required to contribute to property maintenance, joint repairs, and insurance. If other residents do not pay their share, the property may deteriorate, and this could affect the value of your apartment and your quality of life there.

Inheritance Rights

Upon inheritance, the company shares pass to the heirs, but the company bylaws or shareholders agreement may restrict the heirs' right to hold shares or contribute to housing costs. This could lead to family disputes or financial losses.

All of these are considerations that must be examined carefully before signing. Our firm assists you in understanding all these risks and taking steps to protect yourself.

Comparison: Apartment in a Company vs. Apartment in Full Ownership

As can be seen, each model has significant advantages and disadvantages. An apartment in a company may be a more affordable option or suitable for certain circumstances (such as urban renewal projects), but it involves higher legal and economic risks. An apartment in full ownership is more secure, but generally more expensive.