Buying on Paper in Israel - Metziya or Meshuga?

A physician, an engineer, and kablan (Hebrew for contractor) were discussing who among them belonged to the oldest of the three professions represented. The physician said, "Remember, on the sixth day God took a rib from Adam and fashioned Eve, making him the first surgeon. Therefore, medicine is the oldest profession."
The engineer replied, "But before that, God created the heavens and earth from chaos and confusion, so that makes Him the first engineer. You’d have to agree that engineering is an older profession than medicine."
Then, the kablan spoke up. "Yes," he said, "But who do you think created all of the chaos and confusion?"
Investing in real estate can be intimidating enough, even if you're purchasing a home in a neighborhood you know well. The thought of buying a home in another country can be even scarier. And how about buying 'on spec'? In Israel? Maybe you have heard a horror story of a contractor taking money and fleeing to parts unknown leaving what could pass as an archeological site, not to mention hordes of angry people, in his wake! One such story is enough to make anyone shy away from the concept of buying on paper, but I'm here to tell you that things have changed, in a big way. There has been a whole slew of new laws enacted over the last three years that drastically reduce the amount of risk of buying on paper. I will show you how your money will be safe every step of the building process until, and even a few years after, you get your key.
The first payment is made when the contract is signed. Often this is % 20 of the entire cost of the new home. 'What?!', you just may exclaim. 'I get nothing and he gets one-fifth of my money!' Well, if you are smart you transfer the money into an escrow account until the land gets transferred into your name. The next payments should coincide with certain building milestones, which are contractually agreed upon. Make sure you go with a developer that has a proven track record of not only keeping to his milestones in a timely fashion, but also sticking to his stated monetary amounts. If the contractor believes in his ability to do so he should have no problem inserting a clause stating you will be compensated with a specific monetary amount should the building process take longer than the agreed timeline.
Every payment should be secured with a bank guarantee – this way even if the kablan has been overtaken by wanderlust and moved to Guatemala, you know that you haven't lost your investment.

When the building process is complete, before making your final payment, insist on doing a detailed inspection with the contractor. Go slowly. Turn on all of the faucets to check for water pressure, open all doors and windows, look for anything that may signify a problem – a puddle in the center of the living room may be a good thing to discuss. See that the floor feels steady, see-saws belong in the yard. Flush the toilets, check all of the outlets.
Don't worry though, handing over the apartment signifies the beginning of the trial period. Piping is covered for two years. Most components in the flat are covered for the first three years. Cracks in the walls must be fixed within the first five years. Significant peeling of exterior covering -hold your hard hats - seven years!
Biting you nails while handing over your money is a thing of the past. Go with a good developer, bring your friends in so that you already like your new neighbors, and spend your time contemplating light fixtures and carpets and my all-time favorite question of marble versus granite
For a look at an an excellent example of a luxury development in Katamon, Jerusalem visit this website: www.Agnon11.co.il.

Sima Menora is a realtor in Jerusalem, specializing in sales of wonderful existing homes and exciting new developments. Feel free to call her at 0528-342-390 or 1-718-989-3939 or email sima@Habitatrealestate.co.il or if you happen to be in Wolfson stop by to say,'Hi!'