Buying an apartment is, for most people, the most significant transaction of their lives, and often the single largest one, into which they put most of their hard-earned savings.
That is why the purchase should be handled with an attorney who focuses on real estate transactions and has genuine experience with them. Just as important, the deal cannot succeed on the attorney’s work alone. As buyers, you need to stay closely involved and cooperate with your attorney throughout the process, above all during the negotiation of the purchase agreement.
You are the ones signing the apartment purchase contract, and you are personally responsible for every obligation the buyer takes on under it. You should understand exactly what you are signing, what each term of the contract means, and what the consequences of breaching those terms are.
To that end, it is worth getting to know the main clauses that a typical apartment purchase contract contains, as detailed below.
Apartment purchase contract – description of the apartment
The purchase contract must set out the exact and complete details of the apartment being sold: the address, the block, parcel and sub-parcel numbers, the apartment’s area, and so on.
If the apartment is part of a condominium building, the contract should also state whether any parts of the common property are attached to it, such as a roof, a parking space or a storage room.
If the parties agreed that the sellers will leave certain items in the apartment, such as the air conditioning system or the kitchen cabinets, these should be listed as well.
The parties’ declarations in an apartment purchase contract
In the declarations section, each party makes its own representations and undertakings on the points that concern it.
It is customary for the seller to declare, among other things, what rights he holds in the apartment (such as ownership or a lease), and whether those rights are free of third-party rights such as mortgages, attachments or court orders. He must also declare the physical, legal and planning condition of the apartment and whether it has any defects, such as construction defects or a moisture problem, in line with the duty of disclosure that applies to him.
As for the buyer, it is customary for him to declare that he was given the opportunity to inspect the apartment’s physical, legal and planning condition, that he is purchasing it AS IS, and that he has no claims regarding the apartment, including any nonconformity or defect, except for a hidden defect that the seller knew about and did not disclose. He must also declare that he is able to finance the purchase. If the buyer intends to take out a mortgage loan, he will usually declare as well that his obligation to pay the full consideration does not depend on the bank approving the loan, and remains in force even if the bank ultimately declines to grant it.
Documents for transferring the rights in an apartment purchase contract
To register the transfer of rights in the apartment from the sellers to the buyers at the Land Registry (“Tabu”), the sellers must deliver the following documents to the buyers:
- Deeds of sale or deeds of lease transfer.
- A land appreciation tax clearance for the Land Registry, confirming that no land appreciation tax is owed or that an exemption applies.
- A municipal clearance for the Land Registry, confirming that no debts are owed to the municipality, including the betterment levy, or that an exemption applies.
- An irrevocable power of attorney on behalf of the sellers (for registering the transfer of rights in the apartment from the sellers to the buyers).
To secure the delivery of these documents, contracts usually provide that at signing, the parties will sign the deeds of sale or lease transfer, the sellers will sign the irrevocable power of attorney, and the buyers will sign a power of attorney of their own, allowing the deletion of the cautionary note registered in their favor if the apartment purchase contract is canceled following a fundamental breach.
These documents are deposited in trust with the sellers’ attorney and are handed over to the buyers, together with the land appreciation tax and municipal clearance certificates, against payment of the balance of the consideration for the apartment.
The consideration clause in an apartment purchase contract
The consideration clause must state the purchase price and the payment schedule, according to the number of installments the parties agreed on.
Whatever that number is, it is customary to provide that the first payment is made at the signing of the apartment purchase contract, against the registration of a cautionary note in favor of the buyers, and that the last payment is made against delivery of physical possession of the apartment and of the documents needed to register the rights in the buyers’ name.
If, when the final payment falls due, the sellers have not yet obtained the clearances required for the Land Registry, that is, a land appreciation tax clearance from the Tax Authority and/or a municipal clearance (or a clearance from any other municipal authority), the sellers should not be paid the entire balance. Instead, a certain portion of it should be deposited in trust with the sellers’ attorney. If the sellers fail to pay the tax amounts they owe on time, their attorney may use the deposit to pay those amounts, obtain the clearances and deliver them to the buyers.
Taxes and expenses in an apartment purchase transaction
Beyond the consideration paid by the buyers, the parties also bear taxes and expenses that arise from the transaction itself.
The following allocation is the accepted practice:
- Land appreciation tax: paid by the sellers.
- Purchase tax: paid by the buyers.
- Betterment levy and development levies: levies imposed under a plan that took effect up to the date the apartment purchase contract is signed are paid by the sellers, while levies imposed under a plan that takes effect after the signing date are paid by the buyers.
- Current taxes and payments: all current taxes that apply to the apartment, such as municipal property taxes and other municipal or government charges, and all other running payments, such as water, electricity and building committee fees, are paid by the sellers up to the date possession is actually handed over, and by the buyers from that date on.
- Attorney’s fees for the transaction: each party pays its own attorney’s fees.
- Costs of registering the transfer of rights in the apartment in the buyers’ name: paid by the buyers.
- Any other payment connected with the apartment purchase contract that is not specified in it: paid by the party required by law to pay it.
Remedies for breach of an apartment purchase contract
Every party to a home purchase contract who acts fairly and in good faith hopes the contract will be performed in full, on all its terms, by everyone who signed it.
Still, one has to plan for the negative scenario, in which the contract is breached in some way by one of the parties, and address it from the outset: what remedies will the injured party have, including the right to compensation and even the right to cancel the apartment purchase contract.
On this point, remember that the Contracts Law (Remedies for Breach of Contract), 5731-1970, defines two types of breach: an ordinary breach and a fundamental breach.
An ordinary breach of an apartment purchase contract is any “act or omission that is in violation of the contract.”
Where a party commits an ordinary breach, the injured party may cancel the contract only after giving the breaching party notice to cure the breach within a reasonable time, and the breach was not cured.
A fundamental breach, by contrast, is a breach such that a reasonable person would not have entered into the contract had he foreseen the breach and its consequences, or a breach that the contract itself designates as fundamental.
Where a party commits a fundamental breach, the injured party may cancel the contract immediately, without first giving the breaching party notice to cure.
Apartment purchase contracts therefore commonly designate certain provisions, such as the parties’ declarations and the payment of the consideration against delivery of possession and of the transfer documents, as the material terms of the contract, so that any violation of them amounts to a fundamental breach, entitling the injured party to cancel the contract immediately and without notice to the breaching party.
Alternatively, the contract can provide that a delay of a few days, say 7-10 days, in making a payment or in delivering possession and the transfer documents will not amount to a breach of any kind and will not entitle the other party to compensation, while a delay beyond those days will already be a fundamental breach, entitling the injured party to agreed (liquidated) damages, usually about 10% of the consideration, and even to immediate cancellation of the contract.
* Updated for 2026
