Guide to Purchasing an Apartment with Existing Building Deviations

What is a building deviation and how does it affect apartment purchase?

A building deviation is a situation where actual construction exceeded the approved building plan, the building permit issued by the municipality, or the data registered in the land registry (Tabo). Such deviations may be minor (such as a few centimeters excess on the building facade) or significant (such as adding rooms, expanding built-up areas, or changing the building's designated use). When you purchase an apartment in a building with an existing building deviation, you as a buyer may face legal, financial, and security risks that could affect the property's value, your ability to sell it in the future, and your ability to make improvements or modifications yourself.

Building deviations typically exist when buildings were constructed many years ago, when construction supervision was less rigorous, or when contractors and workers deviated from plans intentionally or unintentionally. In recent years, building deviations may also arise in urban renewal projects (TAMA 38) and evacuation-relocation initiatives, which buyers should be aware of.

Most common types of building deviations

• Building area deviation: A building or apartment built in an area larger than that approved in the plan or permit.
• Height or number of floors deviation: Construction to a greater height than planned, or addition of extra floors.
• Use deviation: A location planned for one purpose (for example, an office) but built or used for another purpose (for example, an apartment).
• Structural elements deviation: Changes to the load-bearing structure of the building, expansion of balconies, or changes to building lines.
• Missing building permit: Construction performed without any permit, or a permit that was valid only for part of the work performed.

Each of these types can lead to different risks, ranging from legal lawsuits by neighbors to government demands for demolition or remediation of the construction. As a potential buyer, it is essential that you examine the matter thoroughly, understand your rights, and equip yourself with up-to-date legal knowledge.

Legal and financial risks when purchasing an apartment with building deviation

Purchasing an apartment in a building with an existing building deviation involves significant risks that you as a buyer must fully understand. These risks can affect the property's value, your ability to finance it, your insurance eligibility, and your freedom of action in the future.

Legal risk: lawsuits from neighbors and other parties

Neighbors in the building or neighborhood may file a legal lawsuit against the owner (previous or current) of the apartment with the deviation, arguing that the deviation harms their rights. For example, if a building deviation expanded the building and blocked light or ventilation to adjacent neighbors, or if it caused damage to the neighbor's structure, such neighbors are entitled to file a damages claim. As a buyer of the apartment, you may be involved in such a lawsuit, even if the deviation occurred before you purchased the property.

Risk from government offices

Local authorities (municipality) and appropriate enforcement units may inspect the deviation and demand that the owners remove it, remediate it, or pay a fine. In some cases, authorities may take enforcement measures, including closing the apartment for use until the situation is corrected. This risk depends on the severity of the deviation, the age of the deviation, the authorities' enforcement policy on this matter, and the level of supervision in the specific municipality.

Financial risk: reduction in property value and difficulties in sale

A building deviation may significantly reduce the market value of the apartment. Potential buyers will be reluctant to purchase an apartment with legal risk, and banks may refuse to grant a mortgage on such a property. As a result, when you decide to sell, you will likely encounter difficulty finding a buyer, or you will be forced to reduce the price significantly.

Insurance risk: lack of coverage or policy cancellation

Insurance companies may refuse to cover damages of certain types if they are related to building deviation, or may even cancel the policy when they discover the deviation. This could leave you unprotected against damage caused to the building structure or apartment contents.

Planning risk: inability to make improvements or modifications

If your apartment or building contains a building deviation, it may be difficult or impossible to obtain new permits for improvements, expansions, or modifications in the future. Authorities may require correction of the existing deviation first.

Rights of an apartment buyer with an existing building violation

As a buyer of an apartment in a building with a building violation, you have legal rights that protect you. Understanding these rights is essential to take informed steps and protect your interests.

Right to withdraw from the transaction

Generally, if the seller did not disclose the existence of a building violation to you, or if they misled you regarding its existence or severity, you have a legal right to withdraw from the transaction or claim compensation. This right is based on Israeli consumer protection laws and contract law. However, this right is limited in time — you must generally file a claim within a certain period from the signing of the contract or discovery of the violation, whichever is earlier.

Right to claim compensation from the seller

If it is proven that the seller knew of the violation and did not disclose it, or if they provided you with false information regarding the property, you are entitled to claim monetary compensation. The compensation may include the difference between the price you paid and the actual value of the property with the violation, as well as legal costs and consultation fees.

Right to report and object in future construction proceedings

If the violation still exists and has not been corrected, you may object to the authorities regarding remediation of the matter, or file a complaint in order to compel the authorities to take enforcement action. This right is particularly important if the violation may affect other owners or the public.

Right to housing insurance

Generally, you are entitled to housing insurance on your property, but insurance companies may impose special conditions or limit coverage due to the violation. It is important to clarify in advance with your insurance company the terms and limitations.

Right to protection from future enforcement by the authorities

If you purchased the apartment in good faith and were unaware of the violation, in some cases you may be protected from demands by the authorities to correct the violation (in accordance with the principle of "good faith purchase"). However, this protection is not guaranteed and depends on the specific circumstances of your case.

Scenario Comparison: What Happens When You Sell an Apartment with a Building Violation?

When you decide to sell an apartment with a building violation, you may face significant challenges. The following table compares different scenarios and their impact on the sales process:

As you can see, the severity of the violation directly determines its impact on the property value, legal risk, and available solution options. As a buyer, it is essential that you examine the violation thoroughly and obtain professional legal advice before deciding to proceed with the transaction.

How to Manage a Transaction with a Building Violation: Practical Tips

1. Examine the violation thoroughly before signing a contract

Do not rely solely on the apartment owner's statements. Obtain a report from an independent structural engineer or architect who will inspect the property and describe the violation precisely. Also check the land registry, the approved building plans, and the municipality's building permits.

2. Obtain written consent from the seller

If you decide to proceed with the transaction, ensure that the contract clearly reflects the existence of the violation, its precise description, and all related conditions and liabilities. Do not rely on verbal agreements.

3. Add legal conditions to protect yourself

Consider adding conditions to the contract such as: (a) the right to withdraw from the transaction if additional violations are discovered; (b) a price reduction of a certain amount; (c) the seller's liability for future claims from neighbors or authorities; (d) the seller's commitment to resolve the violation before transfer.

4. Check with your bank and insurance company

Contact your bank and inquire whether it is willing to provide financing for a property with this violation, and under what conditions. Also check with insurance companies whether they are willing to cover the property.

5. Obtain legal advice from a real estate attorney

This is an essential step and its importance cannot be overstated. An attorney with experience in real estate law can help you understand the risks, protect your rights, and manage the contract details in a way that protects you in the long term.

6. Document everything in writing

Every agreement, every inspection, every engineer's report, and every communication with the seller or authorities — document everything in writing. This will be essential if you need to litigate in the future.

Why is it important to obtain legal advice from a real estate attorney?

Purchasing an apartment with a building deviation is a significant legal and financial decision, and obtaining legal advice from an experienced real estate attorney is an essential step that cannot be overstated. A professional attorney can assist you in several important ways:

• Risk Assessment: An experienced attorney can assess the specific risks of the deviation in this matter, in accordance with the law, case law, and the position of local authorities.
• Protection of Your Rights: An attorney can help you navigate the details of the contract in a way that protects your rights and adds appropriate legal conditions.
• Negotiation with the Seller: If you decide to proceed with the transaction, an attorney can negotiate with the seller or their attorney to achieve better terms for you.
• Document Review: An attorney can review all documents related to the property (title deed, building plans, permits, engineering reports) and identify potential issues or risks.
• Guidance in Case of Lawsuit or Dispute: If a legal lawsuit or dispute arises in the future with the seller, authorities, or neighbors, an attorney can defend you and manage the proceedings on your behalf.

The law office of Mendelboim, Gor, Witzman-Gor and Partners, Attorneys at Law, with experience of more than 18 years in real estate and property law, is ready to assist you at every stage of the apartment purchase process. We offer an initial consultation meeting at no cost, where we can discuss the risks, your rights, and the appropriate steps to protect your interests. Contact us today to schedule a meeting.