Many owners in buildings slated for pinui-binui are still paying a mortgage. What happens to it when the building is demolished is a natural question with an accepted solution, but it must be dealt with in advance.
Why is the mortgage a matter for the whole project?
The bank holds a charge on the old apartment. For the developer to obtain bank accompaniment and build, the rights in the plot must be clear or arranged, so an arrangement is needed between the owner’s bank, the project’s accompanying bank and the developer.
The usual arrangement
Usually the mortgage is not repaid. The lending bank agrees to transfer its charge from the old apartment to the rights in the new one, in coordination with the accompanying bank and subject to securities. The owner continues paying as usual. The agreement should require the developer to arrange this and bear its costs.
What to check
- That the owner’s bank is informed and agrees in time.
- That the securities given to the owner also meet the bank’s requirements.
- That no fees fall on the owner without agreement.
- What happens if the owner wants to refinance or sell during the project.
Attachments, caveats and other charges
If an attachment, caveat or other charge is registered on the apartment, it must be dealt with before vacating or through a similar arrangement. Check the land registry extract early to avoid surprises close to vacating.
An apartment not yet registered in your name
An inherited apartment not yet registered, or rights not registered at the Tabu, require preliminary handling. See rights in a property not registered at the Tabu.
Next steps
Every pinui-binui project is different: the building, the developer, the plan and the owners themselves. At Paz Israel & Co. we represent apartment owners in urban renewal projects, review the offer and the agreement and support the owners’ committee throughout. See our pinui-binui and urban renewal page, or contact us to arrange a meeting in Tel Aviv, Jerusalem or Modi’in.
This article provides general information about Israeli law as of the time of writing and is not legal advice.