Plan ahead!

A Real Estate transaction is often the largest transaction that a couple will make in the course of their life. Because of the complexity of the field of Real Estate in our country, it is natural that buyers and sellers choose to hire the services of an attorney to accompany the carrying out of the transaction. Recently a client turned to me to process a case against a lawyer who represented him in the sale of an apartment. The claim of the client was for negligence on the part of the lawyer because he had failed to check for the existence of an obligation for the payment of the property-improvement levy!

What is the property-improvement levy?

The property-improvement levy is a city tax for the right to additional construction or changes that improve the property. This property improvement is profit for the seller, since the value of the property increases with receipt of these rights, when they are actualized or when the property is sold; for example: a permit for additional construction or the construction of the building itself, receipt of a permit for the addition of a swimming pool to the house, a permit to enlarge the balconies or even to improve the public area around the building. All these can be a reason for the obligation to pay the property-improvement levy, and it must be stressed that there is no difference whether the rights to expansion have been actualized or not, rather it is enough that a city construction permit has been issued. From the details of the above one may understand that the obligation of the property-improvement levy may lead to the construction of an apartment house, and not just a single story house. One who purchases a property acquires all the rights or limitations on the property, and that is what sets the monetary value of the property. A seller, who presents his apartment without knowing about the taxes obligatory on the property and the construction rights, is likely to end up selling at a loss. In the case above, the sellers discovered that they had to pay 50,000 New Shekels for the construction rights on the roof of the building, which had not yet been actualized.

The accepted practice with property contracts is that the owners have the responsibility for the property-improvement levy up until the signing of the contract, since the owner knows whether or not requests for structural changes to the building have been submitted. The lawyer had not checked the tax obligations, and it was only discovered after the signing. As a result the buyer gained the construction rights, and the seller, who wasn’t aware of the expansion rights, sold his apartment at a lower price than what it was worth on the market. A lawyer who is knowledgeable in the field of Real Estate constitutes a guarantee to lowering of the dangers and the unnecessary expenses that sometimes can amount to hundreds of thousands of New Shekels. This guarantee has gained importance and a renewed validity in light of the fact that 80% of the litigation for negligence is against lawyers in the Real Estate field.

Plan ahead! — By choosing an attorney who is knowledgeable in Real Estate law you can save yourself a good deal of inconvenience and general loss.

Dror Cohen-Orgad Adv & Notary. English speaking advocate and notary.  Office situated in Country Centre, Ginat Hahula 76/212 Modiin. E-mail: dcor@012.net.il  Tel: 08-9708471