Guide to Registering Rights After Purchasing from a Housing Company

What is a housing company and why registering rights is important

A housing company is a legal entity that holds apartments or real estate units in the company's name, while residents or private owners hold usage and management rights through shareholding in the company. When you purchase an apartment from a housing company, you are essentially buying shares in that company, not the property itself in your private name. This is a completely different legal structure from a direct purchase of an apartment, and it has significant implications for your rights as a buyer, expenses, the need for formal transfer of rights, and your legal protection.

Registration of rights in the Land Register (Tabo) is the legal process by which you transfer your rights from the housing company to your private name in the property register of the Land Registry office. This process is not automatic and requires active steps, documents, payments, and signatures from the parties. Without such registration, you may be exposed to significant legal and financial risks, including loss of rights, difficulties in renting or selling the apartment in the future, and problems with loans or insurance.

Mendelboum, Gor, Witzman-Gor and Partners law firm has over 18 years of experience assisting buyers through this process. We represent purchasers and sellers in complex real estate transactions, including registration of rights from housing companies, in Petah Tikva, Ramat Gan, and the central region. On this page, we will explain to you all the steps, your rights, the risks, and ways to protect yourself.

What is the process of registering rights after purchasing from a housing company

The process of registering rights in an apartment you purchased from a housing company begins on the day you sign the sales contract and does not end until the Land Register (Tabo extract) is changed to your private name. Below are the main steps:

1. Signing the sales contract

At this stage, you and the housing company sign a sales contract that details the transaction terms: purchase price, completion date, apartment condition, special conditions (if any), and legal requirements. This contract must be detailed and include provisions regarding transfer of rights, payment of taxes, registration fees, and division of responsibilities between the parties. It is important that an attorney represents you at this stage to ensure the contract protects your rights.

2. Checking the Land Register and the legal status of the company

Before payment, you must check the property's Land Register (to verify there are no mortgages, liens, or claims) and investigate the legal status of the housing company (registration, tax debts, employee liabilities, pending litigation). This check must be performed by an attorney, as it reveals risks that could affect the purchase.

3. Payment of the price and transfer of shares

Typically, payment is made on the condition that the housing company transfers its shares to you. This transfer is accomplished through a legal document (share transfer deed), in which the company agrees to relinquish all rights in the property to you. It is important that the document be standard and legally valid.

4. Filing an application for registration in the Land Register

After receiving the shares, you must file a formal application with the Land Registry (the property registry office in the district where the apartment is located) to change the Land Register. This application must be accompanied by documents: the sales contract, proof of identity, proof of tax payment (if required), confirmation from the housing company, and an attorney's report on verification of rights. In some cases, a court order or court decision may be necessary (in cases of disputes).

5. Payment of taxes and registration fees

Registration of rights in the Land Register involves payment of capital gains tax (usually paid by the previous property owner), acquisition tax (you pay this as the new buyer, according to the tax rate set by the state), and registration administration fees (to the Land Registrar). These costs vary depending on the property's value, location, and the buyer's status (for example, if it is a first purchase, if the buyer is a company, etc.).

6. Receiving a new Land Register extract

After payment of taxes and completion of registration procedures, the Land Registry issues a new Land Register extract in your private name. This extract constitutes official proof of your ownership of the rights in the apartment and cannot be contested without strong legal evidence.

Your Rights as a Buyer from a Mortgage Company

When you purchase an apartment from a mortgage company, you have specific legal rights that protect you as a consumer and buyer. It is important to know them so you can exercise them when necessary:

Right to Obtain a Land Registry Certificate in Your Name

This is the most basic right. Under the law, every property buyer is entitled to demand registration of their rights in the land registry under their personal name. This right is inalienable, meaning it cannot be waived or transferred to another party. If the mortgage company refuses to file a registration request or delays the process, you can petition the court for specific performance or enforcement of a legal obligation.

Right to Insurance and Protection Against Risks

When purchasing from a mortgage company, you are entitled to be covered by insurance from the time you sign the contract to protect you against risks such as property destruction, fire, or unforeseen liabilities. It is important to ensure that the contract clearly specifies who is responsible for insurance and until when.

Right to Demand Legality and Legal Compliance

You have the right to demand that the mortgage company be legally compliant: properly registered, free of tax debts, free of liens, and without pending legal claims. If the company does not meet these conditions, you can demand contract rescission or a price reduction.

Right to Demand Proof of Rights and Legal Opinion

Before signing a contract, you are entitled to demand full proof from the mortgage company of its rights in the property: land registry copies, consents from previous owners, court decisions (if any), and any relevant document. A legal opinion can be prepared by an attorney and carries substantial legal weight when needed.

Right to Cancellation or Price Reduction Due to Errors or Breaches

If the mortgage company breaches the contract (for example, fails to file a registration request on time or conceals material information), you can demand contract cancellation or a substantial price reduction, provided you can prove the breach with evidence.

Right to Legal Counsel and Problem Identification

While not explicitly stated in law, this right is important: you have the right to consult an attorney at an early stage of the purchase so they can review all legal aspects, identify potential problems, and help you navigate the process. This is exactly what we do at the Mendelbaum, Gor, Witzman-Gor & Co. law office.

Risks and Hazards When Purchasing from a Mortgage Company

Purchasing a property from a mortgage company involves significant risks that may affect your rights, finances, and future as a property owner. Here are the main risks:

Risk: Delay or Cancellation of Land Registry Registration

If the mortgage company fails to cooperate, or if it has legal problems (debts, liens, bankruptcy), registration of your rights in the Land Registry may be significantly delayed or even canceled. In this case, you remain a shareholder only, without registered rights in the Land Registry. This prevents you from selling the apartment, legally renting it out, or using it as collateral for a loan.

Risk: Debts and Liabilities of the Mortgage Company

If the mortgage company has debts to employees, tax authorities, or other creditors, the Registrar of Assets may place a lien on the property or transfer rights to creditors. This may affect your rights as a buyer and complicate registration in the Land Registry under your name.

Risk: Document Errors or Deficiencies

If the documents provided by the mortgage company are not standard, or if important documents are missing (such as consent from previous owners or court decisions), Land Registry registration may be rejected by the Registrar of Assets. In this case, you will need to correct the documents, which may cause additional delays and expenses.

Risk: Concealment of Information or Misrepresentation

If the mortgage company concealed material information (such as debts, legal claims, or Land Registry issues), you may become a victim of legal fraud. Generally, you can sue the company for damages, but the legal process is lengthy and difficult.

Risk: Problems with Future Rental or Sale

Without Land Registry registration under your name, you cannot legally rent out the apartment or sell it to a third party. Even if you are a shareholder, a potential buyer may refuse to purchase an apartment that is not registered in the Land Registry under the owner's personal name.

Risk: Loan and Insurance Issues

Banks and insurance companies typically require Land Registry registration as a condition for granting a loan or providing insurance on the property. Without registration, you cannot use the apartment as collateral for savings or a loan, and it is difficult to obtain legal insurance on the apartment.

Ways to Protect Yourself Against These Risks

The best way to protect yourself is to consult with an attorney early in the purchase process. An attorney can examine the Land Registry, the mortgage company's status, the documents, and identify potential issues before you sign the contract. Additionally, it is important to include clear clauses in the contract regarding the company's liability for Land Registry registration, registration timeframe, and penalties for delay or non-performance. At Mandelbaum, Gor, Witzman-Gor and Partners, we conduct a thorough review at every stage and represent you in all registration procedures to protect your rights.

Property Registration Costs: What They Include and How Much They Cost

Property registration at the Land Registry includes several expenses that can be substantial. Here is a breakdown of typical costs:

Capital Gains Tax

Capital gains tax is a tax paid by the previous property owner (in this case, the mortgage company) on the difference between the property's purchase price and its selling price. Generally, the mortgage company transfers this tax to the buyer as part of the final price. The capital gains tax rate varies depending on the property's value, location, and the duration the previous owner held it. Typically, the rate ranges from 10% to 40% of the capital gain.

Purchase Tax

Purchase tax is a tax paid by the buyer (you) when purchasing a property. The tax rate varies depending on the property's value, location, and the buyer's status. For example, first-time buyers may be eligible for a purchase tax discount. Typically, the rate ranges from 5% to 10% of the property's value.

Registration and Administration Fees

The Land Registry charges fees for submitting an application for property registration. These fees vary depending on the property's value but typically range from a few hundred shekels to several thousand. Additionally, there may be additional administration fees from the Registrar of Properties, depending on the type of application and the complexity of the case.

Attorney Fees

Legal representation in the registration process incurs costs. Attorney fees vary depending on the complexity of the case, the time required, and the attorney's status. Typically, these fees range from a few thousand to tens of thousands of shekels. At Mendelboum, Gor, Witzman-Gor and Partners, we offer a free initial consultation, and fees can be agreed upon as a fixed amount or on an hourly basis.

Due Diligence and Legal Review Fees

Checking the Land Registry, the mortgage company's status, and conducting a full legal review may incur additional costs. An attorney will examine the Land Registry at the Registry Office, review the mortgage company's legality, and request additional documents. These fees are typically included in the overall attorney fees.

Legal Insurance Fees (Optional)

In some cases, a buyer may wish to purchase legal insurance protecting against future legal risks (such as lawsuits or claims to competing rights). This insurance is not mandatory but can be beneficial. Insurance fees vary depending on the property's value and insurance terms.

Table: Typical Property Registration Costs

Estimated Total Costs: For an apartment with average value (for example, ₪1.5–2 million), total expenses can reach a range of ₪150,000–₪400,000, depending on the property's value, location, and the buyer's status. This is a general range only, and each case is different.

What to do if there is a problem in the registration process

If a problem is discovered during the property rights registration process at the Land Registry — such as significant delay, refusal by the Land Registrar, or non-cooperation by the mortgage company — you have several legal options:

1. Written demand to the mortgage company

Send a written demand to the mortgage company (through an attorney) to complete the registration within the timeframe set in the contract. This demand must be explicit and give the company a reasonable period (usually 14-30 days) to respond. If the company does not respond or refuses, you have a strong legal basis for a lawsuit.

2. Court petition for contract performance

If the mortgage company does not cooperate, you can file a petition with the court (civil court) for contract performance, that is, to compel the company to execute the transfer and registration. Typically, the court will order the company to perform the requested action within a fixed timeframe. If the company fails to comply, you can file an additional petition for enforcement of the decision.

3. Lawsuit for contract cancellation and refund

If the mortgage company materially breached the contract, you can sue for contract cancellation and a refund of the money you paid (plus interest and indexation, in accordance with law). This is an extreme option, but it is available if all other attempts have failed.

4. Claim for damages

If the mortgage company caused you damages due to the delay or breach of contract (for example, loss of opportunity to sell the apartment, or additional legal expenses), you can sue the company for compensation. This compensation must be based on actual damages and proof of a causal link between the company's breach and your damages.

5. Appeal to the Land Registrar

If there is a problem in the registration process at the Land Registry office (for example, the Land Registrar's refusal to register without legal justification), you can appeal to the Land Registrar or the Minister of Interior. Typically, the Land Registrar will review the appeal and decide whether the refusal was justified.