10 Mandatory Inspections Before Signing a Sales Agreement

Why Are Legal Inspections Before a Sales Agreement Critical?

Buying or selling real estate is one of the most important financial decisions in anyone's life. A sales agreement is not a simple document — it records legal rights, obligations, conditions, and legal risks that may affect your investment for many years to come. Thorough legal inspections before signing a sales agreement are the only way to ensure you understand every detail and are protected from legal and financial issues that may emerge later.

In decades of experience in real estate law, we have seen many cases where buyers or sellers who did not conduct proper inspections encountered serious problems: unclear property title, unexpected capital gains tax liabilities, issues with rights to the property, or legal surprises at the time of registration. These are all problems that could have been avoided through diligent preliminary inspection.

This page provides a complete legal checklist of 10 mandatory inspections you must perform before signing a sales agreement. These inspections protect your rights, clarify your obligations, and prevent costly surprises in the future.

What Is a Sales Agreement and How Important Is It to Inspect It?

A sales agreement is a legal contract that documents the terms of the transaction between the seller and buyer of a real estate property. The agreement details: property description, purchase price, date of transfer of rights, special conditions, seller's obligations, buyer's rights and obligations, and more. This agreement also records legal issues that may affect the purchase or sale — such as future liabilities, restrictions on property use, or third-party rights.

A sales agreement is not a document that can be signed carelessly. It records your legal rights in the property, and therefore any error, omission, or misunderstanding in the agreement can be very costly. Therefore, thorough legal inspection of a sales agreement before signing is essential in the eyes of any experienced real estate attorney.

10 Mandatory Checks Before Signing a Purchase Agreement

1. Verification of Tabu (Property Registry) — The First and Critical Check

The Tabu is the fundamental legal document for every property in Israel. It records the property ownership, secured rights (mortgages and liabilities), and all restrictions and notes registered on the property. Verification of the Tabu is the first check you must conduct before signing a purchase agreement.

During the Tabu verification, you must check: (a) that the seller is indeed the registered owner of the property; (b) that there are no mortgages or liens you are unaware of (bank mortgage, government debt, etc.); (c) that there are no notes or restrictions on the property that could affect its use; (d) that there are no claims by third parties on the property. If the Tabu is not clean, you must understand the implications before signing the agreement.

In our practice, we have seen cases where buyers discovered only after signing that the Tabu included a mortgage that was not removed, or a legal note that prevented the property's registration in their name. A thorough Tabu verification in advance prevents such situations.

2. Verification of Current Tabu Extract

The Tabu changes constantly — every time a mortgage is removed or a new lien is placed, the Tabu is updated. Therefore, checking an old Tabu extract is insufficient. You must obtain a current Tabu extract from the Land Registry Office, which documents the current status of the property.

Verification of the current extract is especially critical in transactions that take some time (between offer and signing). During this period, the seller may place a new mortgage, or a third party may file a claim that will be noted on the Tabu. A current extract ensures you see the full picture.

3. Verification of Capital Gains Tax Liabilities

Capital gains tax is a tax levied on the profit from the sale of a property. The seller must pay this tax, but sometimes the buyer can be partially liable if the seller does not pay. Verification of capital gains tax liabilities is an essential legal and financial check.

During this verification, you must determine: (a) whether the seller has already paid capital gains tax on prior purchases of the property; (b) what the expected profit from this sale is and how much capital gains tax will be required; (c) whether the seller will be able to pay the tax independently, or if the buyer must address this in the agreement. A good purchase agreement should clearly detail capital gains tax responsibilities.

4. Verification of Purchase Tax Liabilities (Property Registration Fee)

Every buyer must pay purchase tax (also known as "property registration fee" or "registration fees") when registering the property in their name. The tax rate depends on the property value, the type of buyer (private or business), and special legal status (owner-occupied housing, first property, etc.).

Verification of purchase tax liabilities is essential so you know in advance how much you will need to pay. In a good purchase agreement, it should be clear who pays the tax (usually the buyer) and the estimated amount. If you are a first-time buyer, you may be entitled to significant purchase tax reductions — this verification is important to ensure you use the discounts you are entitled to.

5. Verification of Mortgage Status and Bank Liabilities

If the property has a bank mortgage (or any other lien), you must check: (a) the exact amount of the debt; (b) the conditions for removing the mortgage (whether it will be removed when the property is registered in your name, or after a certain time); (c) the bank or liening entity, and from whom you must obtain the removal approval.

In many transactions, the buyer finances part of the purchase through a new mortgage. Verification of existing mortgages is critical to ensure they are properly removed and that there are no issues when registering your new mortgage.

6. Verification of Use Conditions and Property Restrictions

Sometimes a property has legal restrictions on how it can be used. These restrictions may be registered in the Tabu, or sometimes they are documented in the purchase agreement itself. Examples: Can the property be used as residential housing only, or can it also be rented to tourists? Is there a restriction on commercial use? Is there a right of a third party (such as a neighbor) to pass through the property?

Verification of restrictions is especially critical if you plan to use the property in a special way (for example, opening a business in an apartment, renting to tourists, etc.). A restriction you did not check in advance could block your plans in the future.

7. Verification of Municipal Obligations and Municipality Payments

Sometimes a property has liabilities to the municipality — unpaid municipal taxes, liabilities on deposits for property improvement (during renovation or expansion), or other fees. These liabilities can be expensive, and when registering the property in your name, you could be liable for them.

Verification of municipal liabilities should include: (a) verification of municipal tax liabilities; (b) verification of liabilities on deposits; (c) verification of whether there are legal proceedings against the property. A purchase agreement should clearly state who is responsible for these liabilities — usually the seller is responsible for liabilities incurred before the sale.

8. Verification of Property's Legal Status (Prior Legal Issues)

Sometimes a property has prior legal issues — lawsuits filed against previous owners, legal proceedings related to the property, or claims by third parties. Verification of this legal status is essential to ensure you do not inherit legal problems from the past.

In our practice, we have seen cases where a buyer discovered only after registration that a third party claims a right to the property, or that there is a pending legal proceeding that could affect the property. A thorough verification in advance prevents such situations.

9. Verification of the Agreement Content Itself — Terms, Clauses and Obligations

After you have reviewed the property itself (deed, liabilities, restrictions, etc.), you must review the contents of the purchase agreement. This review includes: (a) verifying that all the terms you discussed with the seller are documented in the contract; (b) reviewing legal clauses (who is responsible for repairs, what happens if the seller does not vacate the property on time, etc.); (c) reviewing dates and conditions (when the purchase price will be paid, when an existing mortgage will be released, etc.).

A purchase agreement that is not reviewed carefully may be full of conditions you did not understand or did not agree to. A thorough review of the contract ensures that you understand all the details and are legally protected.

10. Legal Review with an Experienced Real Estate Attorney

The final and most important review is a legal review with an attorney experienced in real estate law. An experienced attorney can systematically review all of the above points, identify issues you may miss on your own, and protect your rights in the contract.

With decades of experience in real estate law, our attorneys have seen nearly every type of legal issue in real estate—and know how to avoid them or protect you from them. A legal review with an experienced attorney is a small investment that could save you considerable money and problems in the future.

Comparative Table: 10 Inspections and Their Objectives

Why These Inspections Are Essential — Risks If You Don't Perform Them

If you sign a sales contract without performing these inspections, you expose yourself to significant legal and financial risks:

• Registration will not be possible: If the taboo is not clear, or if there are legal issues you did not check, you may not be able to register the property in your name at the Land Registry.
• Unexpected obligations: If you do not check municipal obligations, capital gains tax, or purchase tax, you may face expensive financial surprises after signing.
• Use restrictions: If you do not check legal restrictions, you may discover that you cannot use the property as planned.
• Past legal problems: If you do not check the legal status, you may become involved in a lawsuit or legal proceeding you did not anticipate.
• Unfair contract: If you do not carefully review the contract content, you may be liable for conditions you did not agree to, or you may not be protected against the seller's obligations.

Each of the aforementioned issues can be very costly — not only financially, but also in terms of time, stress, and legal hassle. These inspections ensure that you understand all the details and are legally protected.

Practical Checklist: Property Sale Contract Verification Table

Below is a practical checklist you can use to ensure you have conducted all essential inspections:

This checklist ensures you have completed all essential inspections before signing a purchase contract. If you are uncertain about any point, or if any inspection returns a negative or complicated answer, contact an experienced real estate attorney before signing.

Why Choose Experienced Real Estate Lawyers

Reviewing a purchase agreement is a complex legal task that requires experience, knowledge, and attention to detail. Lawyers experienced in real estate law know which issues to look for, how to protect your rights in the contract, and how to avoid legal problems in the future.

At Mendelbaum, Gor, Witzman-Gor and Partners, we specialize in real estate and property law since 2008. With decades of experience, we have seen almost every type of legal issue in real estate — and know how to protect you from them. Our approach is personalized, dedicated, and detail-oriented in every transaction, to ensure that your rights are fully protected.

We offer a free initial consultation to discuss your needs, your transaction, and how we can help. We are located in Ramat Gan, and our services are available to buyers and sellers in real estate throughout the central region.