The contractor has a lawyer. But who represents you?
When a home buyer pays legal fees to the contractor's lawyer, does it necessarily mean they are representing them too? Here are the things you must know before buying a new apartment.
After choosing an apartment, floor, and air direction, buyers receive a thick package of documents: a sales contract, technical specifications, plans, appendices, and bank accompaniment documents. In the sales office, they explain that a law firm is handling the project, and the contract also includes a payment for legal expenses. From here, it is a short step to the conclusion that the legal side is already taken care of. However, the law firm accompanying the project acts on behalf of the contractor and does not represent the buyers in the sales transaction, except for handling the registration of their rights. The purchase contract even requires this to be stated explicitly, and sometimes buyers also sign a separate declaration confirming that they are aware of this. Even if they are required to pay legal expenses, the payment does not entitle them to independent advice regarding the contract and the risks involved in it.
This distinction is especially important when buying an apartment "on paper," where buyers commit to a significant transaction even before the property is completed. The contractor's lawyer does not negotiate for the buyers, does not examine whether the payment schedule suits them, and is not required to reduce provisions that give the contractor the option to delay delivery, change the design, or charge them for additional payments. These are issues that a lawyer on behalf of the buyers should check.
The check begins even before the comments to the contract. It is necessary to clarify what rights the contractor has in the land, whether liens are registered on it, what the status of the building permit is, who the body accompanying the project is, and how the apartment is expected to be registered. When it comes to land of the Israel Land Authority, a combination deal, or a project for which a permit has not yet been received, additional checks and contractual provisions may be required.
After that, the sales contract must be adapted to the plans and specifications. These documents determine the area of the apartment, which parking space and which storage room will be attached to it, what will be included in the common property, what changes the contractor is allowed to make, and what will be considered an addition involving payment. A promise made in a sales conversation is irrelevant if it does not appear in the binding documents.
The Hefziba affair changed the rules. The need for an independent check is especially prominent regarding funds. The collapse of the Hefziba group in 2007 exposed a situation where buyers transferred large sums without receiving appropriate securities. Following the affair, the Sale Law was amended and mechanisms were added intended to strengthen the protection of apartment buyers. The law does not allow the seller to receive more than 7% of the apartment price without providing the buyer with a security determined in it. In a project conducted with financial accompaniment, payments are usually made through vouchers to the accompaniment account, and against them, a guarantee is issued or another security is provided in accordance with the law.
The buyer, on the other hand, does not always have a way to know if the voucher details are correct, if the payment is transferred to the appropriate account, and if the guarantee received matches the amount paid and the apartment purchased. The lawyer on his behalf checks the accompaniment documents, the terms of the guarantee, and the connection between the payment schedule and the securities. If the project is not financially accompanied, the lawyer must examine what alternative protection is provided and how the payments are adapted to the construction stages.
Even a proper guarantee does not cover all the risks in the transaction. It is intended to protect the buyer's money in situations defined by law, but is not intended to ensure compliance with the delivery date or to resolve disputes regarding specifications, attachments, construction defects, and additional expenses. Therefore, a check by a lawyer on behalf of the buyers also includes the linkage mechanism, payment and delivery dates, grounds for delaying delivery, compensation in case of delay, the procedure for ordering changes, handling defects, and the date of registration of rights. It is also necessary to examine the expenses accompanying the transaction and the possible liability for purchase tax. Independent legal representation does not guarantee that the construction will be completed without delays or disputes, but it increases the certainty and protection for buyers in such cases. It allows them to know in advance what they are committing to, how their funds are protected, and which points require change or clarification before signing. The law provides an important framework of protection – but the buyers' lawyer is the one responsible for checking how it is applied in their transaction.
