Buying a New Apartment From a Developer
Your Rights

The Sale (Apartments) Law, 5733-1973 was enacted following cases in which developers became insolvent and buyers paid for apartments that were never built. The Law establishes three fundamental protections: a bank guarantee on all money received by the developer before handover, a mandatory technical specification, and inspection and warranty periods for defects.

Bank Guarantee: Under the Law, a developer who collected more than 7% of the apartment price before handover — must provide a bank guarantee on the amount received. The guarantee may be realised directly from the bank, without the developer's consent, if the project is not completed. This is the most essential protection — ensure you have received a compliant guarantee.

What is not covered by the Sale Law: The Law applies to "an apartment sold before completion of construction." Resale apartments are not covered. Therefore in resale purchases — different protections apply (general Sale Law, duty of disclosure) and there is no automatic bank guarantee.

The Sale Law provides that a developer who delays handover of the apartment by more than two months from the contractual date must pay the buyer compensation. The compensation equals 1.5 times the monthly rent realistically achievable for the apartment being delivered — for each month of delay.

Clear Handover Date: The Law only operates if the contract specifies a defined handover date. Clauses "subject to circumstances" or "subject to approvals" empty the compensation of content. The attorney ensures the handover date is concrete.

In practice: Israeli developers frequently experience delays. The statutory compensation is a minimum threshold — it is possible to negotiate higher compensation in the contract. It is advisable to ensure compensation is automatic — the buyer should not need to sue for it.