Apartment Purchase Guide — Mandatory Inspections Before Signing

Purchasing an Apartment — A Critical Stage Requiring Thorough Inspections

Purchasing an apartment is one of the most important financial decisions in a person's life. In Israel, the apartment purchase process involves complex legal and technical stages, and skipping important inspections can lead to lawsuits, significant financial losses, and even inability to exercise your rights as a buyer. A comprehensive apartment purchase guide must cover legal inspections (purchase agreement, statutory rights, service provision, legal restrictions) and technical inspections (property inspection, insurance, infrastructure condition), as well as inspections related to TAMA 38, urban renewal, joint buildings, and mortgage companies.

At Mandelbaum, Gor, Witzman-Gor & Co., with over 18 years of experience in real estate and property law, we guide apartment buyers through all stages of purchase. On this page, you will find a comprehensive guide to inspections that must be performed before signing a purchase agreement, as well as answers to frequently asked questions by buyers in Israel.

Why Are Pre-Signature Inspections Critical?

After signing a purchase agreement, the buyer is legally obligated to complete the purchase. In some cases, even discovery of a significant problem with the apartment (for example, a structural issue, a debt on the property, or a legal restriction) may not permit contract cancellation. Therefore, thorough inspections before signing are your most important first line of defense as a buyer.

These inspections include:

• Legal inspection of the purchase agreement — terms, rights, obligations, additional payments.
• Legal inspection of the property — statutory rights, restrictions, obligations, legal claims.
• Technical inspection of the apartment — property condition, infrastructure, structural issues, safety inspections.
• Service provision inspection — water, electricity, sewage, telephone, internet.
• TAMA 38 or urban renewal inspection — if relevant to the property.

Stages of Apartment Purchase — When to Perform Inspections?

The apartment purchase process in Israel is divided into clear stages. Legal and technical inspections must be performed before signing the purchase agreement. This stage is called the "due diligence period" and the timeframe for inspections is typically 14–30 days from signing the initial purchase agreement. After signing the purchase agreement, the buyer can no longer easily withdraw from the purchase.

Legal Inspection of the Purchase Agreement — What to Check?

The purchase agreement is the binding document that defines all purchase conditions. A legal inspection of the agreement must cover:

• Identification of parties — names of seller and buyer, ID numbers, legal status.
• Property description — address, apartment number, built-up area, shared area, floor, parking, storage.
• Purchase price — total amount, additional costs (property tax, purchase tax, commissions), payment terms.
• Apartment delivery date — when the buyer will receive the keys and use of the apartment.
• Conditional terms — whether the purchase is contingent on mortgage approval, technical inspection, or other conditions.
• Parties' obligations — what the seller must do before delivery (repairs, cleaning, eviction of previous tenants).
• Seller's warranty — warranty period for certain issues, "as-is" clause, or partial warranty.
• Contract cancellation — under what conditions buyer or seller can cancel the purchase, and penalties or losses.

Legal Inspection of the Property — Statutory Rights and Restrictions

Before signing a purchase agreement, it is mandatory to inspect the statutory rights of the property and any legal restriction that may affect its use. This inspection includes:

• Tabo inspection (title registry) — the Tabo registry (at the Land Registry) shows who the legal owners of the property are, what mortgages or transactions are registered on the property, and what restrictions or third-party rights exist. This inspection is mandatory.
• Inspection of property debts — whether there are mortgages, bank liens, or debts to local authorities (property tax, taxes) that will transfer to the new buyer.
• Inspection of legal restrictions — whether there are rights for a third party (for example, right of way, right of first refusal, shared use right), or legal provisions that limit the use of the property.
• Inspection of legal claims — whether there are legal claims against the seller or property (for example, claim for structural damages, claim from former employees, or claim for breach of contract).
• Inspection of permits and licenses — whether the property was built in accordance with the building plan, whether building permits exist, whether renovations were performed without a permit.

Technical Inspection of the Apartment — Physical Property Inspection

A technical inspection of the apartment is mandatory to ensure the property is in good condition and there are no significant structural or infrastructure issues. This inspection includes:

• Structural inspection — inspection of walls, ceiling, floor, windows, doors, and all building elements for signs of damage, moisture, cracks, or other structural issues.
• Infrastructure inspection — water (plumbing, leaks, water pressure), electricity (wiring, electrical panel, outlets), sewage (plumbing, flow), heating, cooling, ventilation.
• Systems Inspection — water heater, air conditioning, solar water heater, security system, stove, oven, refrigerator, washing machine (if included in the purchase).
• Safety Inspection — window railings, balcony railings, safe stairs, emergency lighting, fire suppression system.
• Common Building Inspection — if the apartment is part of a common building, it is mandatory to inspect the condition of the roof, ground floor, elevators, boiler room, as well as verify property tax and insurance payments.

Inspection of Service Provision — Water, Electricity, Sewage, Telephone

Before signing a purchase agreement, it is mandatory to verify that all basic services (water, electricity, sewage, telephone, internet) are connected to the apartment and operational. This inspection includes:

• Water — verification that there is adequate water pressure, no leaks, and connection to the public water system.
• Electricity — verification that the apartment has electricity, the electrical panel is in good condition, and there is a connection to the electricity company.
• Sewage — verification that there is a connection to the public sewage system, no drainage issues, and all drains are operational.
• Telephone and Internet — verification that there is telephone and internet connection (or the possibility to connect).
• Gas — if the apartment uses gas, verification that there is a gas connection and the gas system is safe.

Inspection of TAMA 38 and Urban Renewal — Special Cases

If the apartment you are purchasing is part of a TAMA 38 project (urban renewal) or a common building that has undergone tenant displacement and reconstruction, additional inspections are mandatory. TAMA 38 projects are urban renewal projects in which old buildings are renovated and new buildings are constructed in part or entirely. Purchasing an apartment in such a project involves significant legal and financial risks.

Inspections in TAMA 38 Projects

Inspections that must be performed before signing a purchase agreement in a TAMA 38 project:

• Project Plan Approval — verification that the project plan has been approved by local and governmental authorities.
• Tenant Consent — verification that the majority of tenants in the original building have agreed to convert to a TAMA 38 project.
• Cooperative Agreement — review of the cooperative agreement between the tenants and the contractor, which defines the rights and obligations of each party.
• Project Timeline — verification of the project timeline, evacuation dates, and return dates to new apartments.
• Project Costs — verification of project costs, expected payments, and amounts that tenants will be required to pay in addition to the value of the new apartment.
• Project Insurance — verification of project insurance to protect tenants from financial loss due to project delay or cancellation.
• Accuracy of Lists — verification that the list of tenants participating in the project is accurate and your name is registered on it.

Inspections in Common Buildings — Rights in Common Areas

If the apartment you are purchasing is part of a common building (floor in a multi-story building or apartment in a building with common areas), additional inspections are mandatory:

• Common Building Agreement Review — review of the common building agreement that defines the rights and obligations of each tenant, ownership shares in common areas, and decision-making procedures.
• Bylaws Review — review of the common building bylaws that define rules for using common areas, prohibitions, and procedures for paying common costs.
• Property Tax and Insurance Review — verification of property tax and common building insurance costs, as well as verification that there are no outstanding debts due to non-payment of property tax or insurance.
• Common Costs Review — verification of common costs (electricity, water, sewage, cleaning, maintenance, elevators), as well as verification that there are no outstanding debts due to non-payment of common costs.
• Tenant Composition Review — verification that there are no tenants with outstanding legal obligations or arrest warrants, and that there are no legal issues in the common building.

Costs of Purchasing an Apartment — What Should You Budget?

Purchasing an apartment involves many costs beyond the purchase price itself. It is important to budget for these costs in advance to avoid surprises at the time of transfer. These costs include taxes, fees, insurance, and legal expenses.

Capital Gains Tax

Capital gains tax is a tax paid by the seller on the difference between their original purchase price and the sale price. Usually, the seller pays capital gains tax from the seller's income, but the purchase contract may contain a provision that the buyer bears part of the tax. It is important to check in the contract who pays the capital gains tax.

Acquisition Tax

Acquisition tax is a tax paid by the buyer on the purchase of a property. In Israel, acquisition tax varies according to the property value, the status of the seller (individual or corporation), and the status of the buyer (first-time buyer, repeat buyer, corporation). Generally, a first-time buyer purchasing their first apartment pays a lower acquisition tax than a repeat buyer or corporation. The acquisition tax rate ranges from a few percent to over 8% of the property value, depending on the circumstances.

Registration Fees at the Land Registry

Registration costs include fees charged by the Land Registry of Israel for registering the new transaction in the land registry. These costs vary according to the property value and typically range up to several thousand shekels.

Attorney Fees

Attorney fees in an apartment purchase transaction vary according to the size of the transaction, the complexity of the transaction, and the fee regulations of the Bar Association. Generally, an attorney's fee ranges from 0.5% to 1% of the transaction value, but there may be additional charges for additional legal work (for example, a full legal review, guidance on a Tama 38 project, or representation in a legal claim).

Apartment Insurance

Apartment insurance (homeowners insurance) covers damage to the building and the contents of the apartment. Usually, the seller pays the insurance until the date of transfer, and the buyer pays from the date they receive the apartment. The cost of apartment insurance varies according to the size of the apartment, location, age of construction, and type of insurance. Generally, apartment insurance costs range from several hundred shekels to several thousand shekels per year.

Common Expenses in a Multi-Unit Building

If the apartment is part of a multi-unit building, the buyer will be obligated to pay common expenses (common electricity, common water, common sewage, cleaning, maintenance, elevators, etc.). These costs vary according to the size of the building, the condition of the building, and the type of services. Generally, common expenses range from several hundred shekels to several thousand shekels per month.

Comparative Table — Legal and Technical Inspections When Purchasing an Apartment

Below is a table comparing legal and technical inspections that must be conducted before signing a purchase agreement:

How Long Does the Inspection Process Take Before Signing?

Generally, the inspection process before signing a sales agreement takes between 14 to 30 days. This timeframe depends on the type of property, the complexity of inspections, and the responsiveness of the parties involved. For TAMA 38 projects or complex shared buildings, inspections may take considerably longer. It is important to plan ahead and begin inspections as soon as possible after signing the initial purchase agreement.