Purchasing housing from a developer
Purchasing housing from a constructor
The purchase of housing from a construtror is a very significant step in life. This is a step which is a dream come true on the one hand, but also a complex step with many complexities requiring attention. In this article we elaborate on the purchase of new apartments from a developer, the significance of signing, funding and expenses.
The significance of signing
It is important to remember that a contract with a developer is a binding agreement. A request to withdraw, cancel or make any changes after signing is likely to encounter difficulty and sometimes to entail additional costs or even a significant fine.
In this context, it should be clear that there are preliminary documents with legal significance very similar to a regular contract. Therefore, even when asked to sign them, there is legal significance to this signature, and until certain of the deal it isn’t recommended to do so.
Documents of this type that are common in more than a few new projects, are a memorandum or a purchase request. The courts have ruled on a number of occasions that a memorandum can be considered an actual contract when upholding certain legal aspects. A purchase request on the other hand is a document that represents a type of commitment by the buyer to complete the purchase, despite not being an actual contract.
Seeing to sufficient funding
Once we have understood the significance of the contract and the importance of the different clauses (from the technical specifications, to the date of delivery and the payment terms) we can move onto a topic no less important – funding.
Since most people need a mortgage at some stage, one can close the deal with confidence, only after receiving bank approval for the mortgage. It should be ensured that the mortgage, together with the personal equity required, covers not only the net cost of the apartment, but also all the additional related expenses. These expenses can be very significant.
Amongst the expenses to consider.:
- Purchase tax – can reach tens of thousands of shekels and even more, if no exemption is available and dependant on the price of the apartment.
- Attorney’s fees for the developer - Even those who choose not to use legal counsel will have to participate in the developer’s legal fees.
- In addition, funding for the purchase of new furniture, appliances, etc. if necessary.