As I wrote before, signing any type of “agreement” is very unlikely to bring you or any of the parties any benefit. These kinds of documents are nothing but a legally binding contract that can only be contested in court.
For some reason, good people with good intentions keep asking the same question: Why not sign such a document? I want to ensure that I will have this property tomorrow.
I understand that after shopping around for your dream home or your spouse’s dream home) you don’t want to miss out on a once in a lifetime opportunity.
The problem begins with the formalities of signing an actual contract. This is especially so for new comers. As I’ve written previously, Real Estate formalities from a legal aspect is a nightmare in this country. Because of these formalities there is always a need to delay the final signature for at least a few days.
Don’t be pressed or tempted:
Like in any other transaction, real estate is like a game. Here are the players in this game:
The Seller – His main interest is to sell the property as soon as possible, get paid and most probably use it for his next purchase. Therefore, he is usually under his own pressure. This is why the seller will be pressuring you into making some sort of commitment to purchase the property.
The Buyer – In this case would be you. Buyers have few concerns and among them are: The spouse’s opinion, being sure he can come up with the necessary amount on time, the legalities as usual, the uncertainty he is doing the right thing, buying for a fair price, buying a property in good condition (in Israel negative surprises are common regarding unseen problems with the construction) as well as other problems that arise.
The Real Estate Agent – This is seen by many as an “unfair player” because all he is interested in doing is to close the deal, and get his share as soon as possible (usually when you sign a contract) and then he “disappears” from the scene. Many people have wrong expectations about this player. An agent is not an engineer or a lawyer and he is neither a loyal friend of any of the parties involved. His job is limited to connecting between your desire to buy, and the seller’s desire to sell and find a house that can be a good match.
For this reason, when an agent promises you the house of your dreams you should always be aware that it could be instead the house of your nightmares, that is if you are not careful and don’t take into account your own interest. The agent is never your advocate in a transaction.
The bank – If you need a mortgage the bank will be a very important player and if you don’t play by the rules, the bank’s rules that is, you will find yourself being denied a mortgage. The bank will be preoccupied with one issue only: Getting back every penny they lent you.
For this purpose the bank must be sure the property is “legally safe” for a transaction, in other words, the borrower has the financial means/ability to re-pay the loan and that the money lent will be paid to the seller and not spent on something else by the buyer.
The lawyers – Lawyers are always concerned with two issues. The first is to be paid by his client when the contract is signed and the second is to be sure his client is making a safe transaction.
The lawyer’s nightmare is when he finds out he wasn’t thorough enough or made a legal mistake that can lead to a malpractice lawsuit. For this reason, for the lawyer’s own safety, he will do everything possible to take care of your interest for the entire time, until the property is finally registered in your name (remember that in Israel the final register of the property could take years).
Personally, I prefer to represent only one side in a Real Estate transaction. In practice many times the same lawyer represents both the buyer and the seller. This is problematic because if any legal dispute between the buyer and seller arouses, the lawyer will not be allowed to represent either side in court.
These are the main players but not all of them. There are many others such as the: “Israel Land Authority” (http://www.mmi.gov.il/Envelope/indexeng.asp) or if the property is in the territories the “Minhal Ezrahi” (http://www.cogat.idf.il/894-en/Matpash.aspx) or any other office dealing with the registration of the property.
I recommend a very good site in Hebrew explaining what are the basic concepts used in real estate. It is like a dictionary with around 50 major terminologies used in the real estate sector: http://www.land.gov.il/static/milon.asp
A final word:
Because a “Zichron Devarim” is a legally binding document it is best advised not to sign one before having YOUR lawyer review it thoroughly and works on a full scale contract that can be prepared quickly, precluding the need for any kind of Zichron Devarim.
