Between signing a purchase contract and registering the apartment in the buyer’s name, months or even years can pass. During this time the buyer has already paid much of the price, but the apartment is still registered to the seller. A caution note (he’arat azhara) is the tool that protects the buyer in this gap.
What is a caution note?
It is a registration at the Land Registry (Tabu), or with the Israel Land Authority or the housing company when the property is not registered in the Tabu. It tells anyone checking the property that the owner has undertaken a transaction in it. After registration, a conflicting transaction, such as a sale to someone else or a new mortgage, will not harm the rights of the person in whose favour the note is registered, unless they agreed to it.
When is it registered?
As early as possible, usually right after signing and before any significant payment. The seller typically signs a request to register the caution note when the contract is signed, and the buyer’s lawyer files it. For new apartments from a developer, the note is sometimes registered on a large undivided plot, so other security should also be checked.
What does it protect against?
- A double sale: a second buyer who checks the land registry extract will see the note.
- New liens and attachments: a seller’s creditor who registers an attachment after the note will generally rank behind the buyer, subject to exceptions.
- Insolvency of the seller or developer: the note greatly improves the buyer’s position, though on its own it is not always enough.
A caution note for the bank
When the buyer takes a mortgage, the bank also asks to register a caution note in its favour until the mortgage itself is registered. See buying an apartment with a mortgage.
How is a caution note removed?
With the consent of the person in whose favour it was registered, usually by signing a removal request, or by court order. Once the deal is completed and the rights are registered to the buyer, it is no longer needed. If a deal was cancelled and the note remains, it may delay a future sale. See also cancelling a deal and breach of contract.
Where do you go from here?
Every deal and every property is different, and a small detail in a contract or registration can be worth a lot of money. At Paz Israel & Co. Law Office we support buyers, sellers, landlords and property owners, from the first check to registration at the Land Registry. For more information see our real estate lawyer page, or contact us to schedule a meeting in Tel Aviv, Jerusalem or Modi’in.
This article provides general information, is correct as of the time of writing, and does not constitute legal or tax advice or a substitute for reviewing your specific circumstances.