Real Estate Attorney for Selling a Property
Planning to Sell Your Apartment? Essential Legal Considerations
If you are looking to sell an apartment you own, there are several important legal considerations to take into account as part of the sale process.
It is advisable to seek the professional assistance of a real estate attorney from the very beginning of the process. An attorney can guide you through each step, conduct the necessary checks for the sale, and help avoid common mistakes and miscalculations that could impact the viability of the deal or even jeopardize it.
Verification of Title and Land Registry Details
Your real estate attorney should review the title registration by checking the Land Registry document, if the property is registered there, or by obtaining a rights confirmation if the property is registered with the Israel Land Authority or a housing company. The attorney will inform you of any implications arising from this check and whether there are any specific issues that need to be addressed before proceeding with the sale.
Examination of Rights Transfer Procedures
Once you have clarified the registration of rights and any special issues that may have arisen, you need to examine the required procedure for transferring right’s to the prospective buyer and ensure that the sale agreement reflects this procedure appropriately.
Capital Gains Tax Considerations
An important issue to review before selling the property is the capital gains tax. Your real estate attorney should carefully assess whether the sale is exempt from capital gains tax and determine which exemptions might apply to your specific case. If no exemption is available, the attorney should evaluate the expected capital gains tax and find ways to minimize your exposure to high tax payments. This can include conducting a self-assessment to claim any allowable deductions.
Betterment Tax Considerations
Another issue to review is whether there is any exposure to betterment tax. Sometimes, this is not examined by attorneys representing sellers. Such checks are required in every transaction, especially in cases involving land-attached apartments or penthouses. Neglecting this issue could cost the seller a significant amount of money, which should be known in advance to allow for appropriate preparation and to assess if the asking price is attractive considering additional payments required by authorities.
Building Code Violations
It is also important to check for any building code violations that may require additional investigation regarding their impact on the sale and rights transfer to the buyer. Determine whether any regularization or special attention is needed in the sale agreement.
Mortgage Considerations
If there is an existing mortgage on the property being sold, you need to verify the procedure for clearing or transferring the mortgage. Obtain the necessary documents from the mortgage bank regarding the mortgage settlement and ensure that the mortgage is removed from the Land Registry or any other relevant register.
Additional Transaction Costs
In addition to the aforementioned expenses such as capital gains tax, betterment tax, registration adjustments, or mortgage clearance, consider other associated costs like brokerage fees, attorney’s fees for the sale, minor renovations or repairs if needed, moving costs, and more.
Drafting the Agreement and Negotiating with the Buyer’s Representative
After reviewing the items listed above (this list is not exhaustive), you should meet with the prospective buyer to finalize the commercial terms of the deal, including payment amounts and dates, the moving-out date, mortgage clearance, how the apartment will be handed over, and with what equipment, among other details.
Once the commercial terms are agreed upon, you should pass the task of drafting the sale agreement and negotiating the legal terms to your real estate attorney. They will contact the buyer’s representative to negotiate and provide an initial draft of the sale agreement.
It is advisable not to be tempted to sign a letter of intent, as this can have implications that you may not be fully aware of at the time of signing. For further details on signing a letter of intent and its implications, you are welcome to read the article available on our website.
Post-Sale Agreement Support
The work of a real estate attorney does not end with the signing of the sale agreement, as many people might assume. The attorney’s support continues until the completion of the transaction, which includes not only receiving the full payment from the buyer and transferring possession but also ensuring that all transfer documents are handed over from the seller’s attorney to the buyer’s attorney.
After the sale agreement is signed, your attorney should report the transaction to the tax authorities and obtain the necessary capital gains tax clearance certificates to register the property in the buyer’s name at the Land Registry.
Additionally, the attorney should oversee the registration of a cautionary note for the buyer and the process of clearing the mortgage and removing all related registrations. They should also obtain confirmation from the municipality of the absence of any property tax arrears and from the local committee confirming the absence of any betterment tax liabilities.
If the buyer has paid the full amount and the property has been handed over but all required documents for registering the rights in the buyer’s name are not yet available, the real estate attorney should open a specific trust account for the transaction, where part of the payment will be held until all transfer approvals are received.
Once all transfer approvals are properly and fully provided by your attorney to the buyer’s attorney, the transaction can be considered complete, and your attorney’s work is finished.
As outlined above, selling an apartment involves extensive engagement and requires attention to many details, some of which are mentioned here. It is important to note that this is not an exhaustive list, and each transaction has its complexities that require detailed checks and specific attention.
If you are interested in selling an apartment, feel free to contact the office of Attorney On Eyal Yanku. We will be happy to answer any questions you have about selling property and guide you through the process.
