Some buy off-plan and decide to sell before delivery: because plans changed, they are moving, or to realize a profit. It is possible, but it is not an ordinary apartment sale.
Is the developer’s consent needed?
In most contracts, yes. The contract usually requires the developer’s consent to a transfer of rights before delivery, and sometimes a handling fee. Check this clause when buying and negotiate it. See negotiating a developer contract.
What happens to the guarantees?
The new buyer must receive protection for the money he pays. The guarantees issued to you under the Sale Law are assigned to him or replaced with new ones, coordinated with the financing bank. No money should be transferred before this is settled. See Sale Law guarantees.
Taxes
Selling rights in an apartment before delivery is a real estate transaction in every respect: the seller reports and may owe capital gains tax, and the buyer pays purchase tax. Exemptions and reliefs for a single apartment may also apply here, subject to conditions.
What should the buyer check?
- The original contract with the developer, the specification and the remaining payment schedule.
- That all payments made are backed by guarantees and there are no debts to the developer.
- The expected delivery date and the right to late delivery compensation.
- That the developer approved the transfer in writing.
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.