In the early stages of a pinui-binui project, owners are approached by developers, “organizers” and brokers, who often ask them to sign a “non-binding” document to “test interest”. It is important to understand what such a signature means.
Who are organizers?
An organizer works with owners to promote a project, sometimes on behalf of a developer and sometimes to “sell” the organised building to a developer later. The law imposes disclosure duties on them, including stating whom they represent and what their interest is.
Letters of intent and memoranda of principles
Early documents may include a commitment to work only with a particular developer for a period, and sometimes commercial terms. Even if a document says it is “not binding”, some clauses may be. By law, early commitments of this kind are limited in time and conditions, so check the wording before signing.
Why it matters
- An early signature may prevent owners from holding a tender and getting better offers.
- It may cause disputes between neighbours who signed with different parties.
- It may fix terms before the owners received professional advice.
What we recommend
- Do not sign any document before the owners have elected a committee and a lawyer of their own.
- Ask every party to disclose in writing whom they represent and who pays them.
- Run an orderly developer selection. See how to choose a developer.
Already signed?
An early signature is not necessarily the end of the road. A lawyer can check the document, its validity and the owners’ options. See a lawyer for apartment owners.
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.