Assuming you have some clarity about financing and where you
want to buy. Now what?
There are three major categories of residential apartments:
1] Statutory Protected Tenancies (Key Money Apartments; 2]
Sale of apartments already built; 3] New apartments not yet
built, also called "buying from plans."
Key Money Apartments
In comparison to the other two types of transactions, Key
Money investments are much rarer and give you a status
somewhere between a home owner and a tenant. It doesn't at
all apply to apartments built after 1968 and is found more in
the older communities, such as Geula and Machaneh Yehuda
areas of Jerusalem, or the old city of Tzfas. Just keep in
mind if you are considering it, that the actual ownership is
retained by the original owner. The one who pays key money is
just a protected tenant. His nominal rent and the landlord's
duties are both regulated by law.
Rights can be sold and new money received is divided between
the landlord and the outgoing tenant according to percentages
worked out by the law, often one-third to the owner and two-
thirds to the tenant. If you end up renting before buying,
you can be sure that the landlord's attorney will put in an
exclusion clause in the lease lest there be any remote
possibility of considering this rental as a protected
tenancy!
The other two categories are very common options for
purchasing. Unlike some countries in the world where a child
is born and grows up in one house till he is married,
Israelis move around. The secondhand market for used
apartments is active and one that should be considered for a
serious buyer.
Buying Secondhand
Generally speaking, older apartments were built with stronger
materials than the newer ones. None of these imported,
manufactured walls from Romania or elsewhere were used. You
have the advantage that you see what you are buying. The
neighborhood is there already. Everything is in its place,
the schools, the shuls, the markets, the buses, the
health clinics. It's all there. You can ask away.
Finding out about available secondhand apartments is common
sense but it takes work. Of course you can consult the major
religious newspapers and real estate agents. Less commonly,
there are government or private auctions of property in
religious areas which is being sold following a government or
court decision. Notices are placed in the major Israeli
(secular) newspapers.
People looking in a particular area can often hear about
apartments from residents of the area. Go knock at the door
and ask! But, be warned! The friendly advice which so easily
led you to your dream apartment, may have a big price tag
attached! Several years ago, in our community, a purchase of
an apartment resulted from a friendly tip in a casual
conversation, and then came the din Torah which
required the buyer to pay a hefty fee to the tipper!
Real estate agents know their neighborhoods and can save you
valuable time and effort in trying to discover what is
available. Not every profession is regulated in Israel, but
the real estate industry is.
Deals are often made at inconvenient hours and the parties
feel pressure and fear of losing a good deal and therefore
they will sign a memorandum of their agreement (zichron
devorim), even passing money on the deal, before the
lawyers get involved.
If a real estate agent is involved, he will of course want to
tie it up. That's what he is in business for. If at all
possible, try to talk to an attorney before signing or paying
anything. He will be the only one just looking out for your
interests.
In Israel, the law views a memo of the sale as a contract
that can be enforced by court order should you change your
mind. This is a big difference from the U.S. where a memo is
not considered enforceable. Most of the time things work out
just fine, especially in our circles. But you should be aware
of what could occur if you are buying from an unscrupulous
person.
Just consider some of the possibilities: the seller may not
be the registered owner, or he may have no right to sell what
he is selling, or another buyer may have already signed with
him or the bank has already started receivership proceedings
for nonpayment of his mortgage, or his estranged wife refuses
to sign onto the sale as necessary. Get the picture?
If you decide to close the deal with a zichron devorim,
at least get some preliminary legal advice so you don't
end up buying the Brooklyn Bridge (or rather the Allenby
Bridge!).
The other major option is to buy an apartment in a new area
that is under construction. With the housing crunch and high
prices in Jerusalem and Bnei Brak, one solution in recent
years has been to develop new and generally young communities
outside the Torah centers, such as Beitar, Beit Shemesh
Kiryat Sefer. This trend can be expected to continue and even
to expand in years to come. This topic will be treated in
more depth in the next article.
Readers are encouraged to ask questions, suggest topics for
discussion, or to share helpful information on topics already
brought up. Please send your comments to:
SCHARMAN@Actcom.co.il or you may send a fax to: 972-2-
5372141.
