Real Estate Pre Purchase Due Diligence
A real estate transaction – whether it is the purchase of an apartment from a contractor, second hand or land – is one of the largest and most significant transactions in human life.
Therefore, the "Due Diligence" tests are a critical stage that cannot be skipped. These tests protect the buyer from risks, prevent surprises in the future, and allow for informed negotiations with the seller.
Adv. Karin Amsalem, who specializes in real estate law and complex transaction management, advises buyers and investors in performing all the necessary tests – from the first stage to the receipt of the key.
Why do we need pre-tests?
In Israel, there is no "buy as it is" model in real estate transactions. The law imposes on the seller disclosure duties, but the responsibility lies also – and perhaps mainly – with the buyer to understand what exactly he is buying.
A thorough test saves:
- Legal complications
- Delays in registration
- Planned Surprises
- Unexpected Costs
- Structural problems or building irregularities
Simply put: a good deal starts with full information.
What tests must be done before signing?
The following are the five main areas of examination that each purchaser must know – and each one is examined in depth before each transaction.
1. Israeli Land Registry Testing and Rights Registration
A test of the Land Registry extract reveals:
- Who is the registered owner?
- Are there any liens, foreclosures or warning notes?
- Are there any other rights on the property (rent, pleasure affinity, etc.)
- Does the listing match the reality in full
In cases of an apartment that is not registered with the Israeli Land Registry (e.g., registration at a mortgage company or administration), additional and more complex tests are required.
2. Planning and Construction Testing
One of the most important tests:
Is the property legally built? Are there any exceptions that can make the purchaser an accomplice to a criminal offense?
Comprehensive planning examination includes:
- Browse Building Case
- Building Permits Check
- Checking match between permit, actual execution and scratch
- Locating demolition orders or proceedings against the property
Any small change – from a service room to the closing of a balcony – must be a match to the license.
3. City Inspections and Taxation
Before purchasing a property, make sure:
- There are no arnona debts
- There are no open upgrades.
- No future payment requirements (e.g. development, infrastructure, etc.)
- What is the expected purchase tax rate
- Does the transaction include liability in the Land Appreciation Tax
Proper legal guidance allows the transaction to be planned to be as cost-effective as possible in terms of taxes.
4. Engineering Testing and Impairments
Even if the property looks excellent with an unprofessional eye, hidden deficiencies can cost tens of thousands of shekels.
Therefore, it is recommended to perform:
- Professional Home Inspection
- Testing water, electricity and sealing systems
- Locating wetlands, floor sunsets, cracks, and safety hazards
- Quality of construction in contractor apartments
A home inspection report also serves as an excellent tool in negotiating with the seller.
5. Checking the circumstances of the transaction and the parties
It is important to understand who is on your side:
- Is the seller able to sell?
- Are there any successors, guardians, or other parties that need to sign?
- Is it a property that has undergone assembly or dissolution proceedings?
- Is the seller in financial difficulties that could jeopardize the transaction?
Trust in the seller and the status of the rights is part of the transaction promise.
What happens after the tests?
After the completion of all the tests, it is possible to move to the draft phase, negotiating and adjusting the contract in accordance with the findings.
Wherever risk is discovered, Karin translates it into a clear contractual requirement: agreed compensation, obligations, security, etc.
The result: a contract that protects the client at maximum.
In conclusion
Preliminary testing is not an "extra" – it is a basic condition for a safe, transparent and smart real estate transaction.
Professional legal support already in the first stage makes it possible to make an established decision, prevent costly mistakes, and ensure that the purchase is carried out smoothly and safely.
Adv. Karin Amsalem advises buyers, sellers and investors at all stages of the transaction – from the initial checks to the registration of the rights and the completion of the transaction.
When an asset is intended to operate a business, checking the rights alone is not enough; it is also important to check who is subject to licensing and adjustments. SeeWho is responsible for a commercial property permit.
