Many assume a developer’s contract is a “standard contract” that cannot be changed. In practice, in most projects quite a few clauses can be improved, especially in early marketing stages or when a group of buyers is represented together.
The key clauses
- Delivery date and force majeure: a clear calendar date and a narrow definition of circumstances that exempt the developer. See late delivery.
- Payment schedule and linkage: an unlinked first payment and a schedule suited to the mortgage. See construction input index linkage.
- Specification and plans: full detail, and limits on changes the developer may make. See the technical specification.
- Changes to the building plan: what the developer may change in common areas and neighbouring buildings.
- Defects and warranty: repair timelines, and no less than the law provides.
- Transfer of rights: whether the apartment can be sold before delivery, and at what cost. See selling before delivery.
- Land Registry registration: a timeline, and costs the buyer must pay. See registering a new apartment.
- Additional costs: the developer’s legal fee, electricity and water connections, and what they include.
How to negotiate
Through a lawyer who knows the contracts in the market and what is customary to ask for. A group of buyers represented together usually gets better terms. Get every promise in writing, as an appendix to the contract, and do not rely on the salesperson’s words.
Where do you go from here?
A developer’s contract is written by the developer’s lawyers, so it protects the developer first. At Paz Israel & Co. Law Office we represent buyers of new apartments and landowners in combination deals: we check the developer, the security and the specification, negotiate the contract and accompany you through handover and registration at the Land Registry. For more information see our property purchase and sale representation 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 advice or a substitute for reviewing your specific circumstances.