Elimination of liens
- Buying an apartment in Israel
- Contract Structure
As an integral part of the contract, it is advisable to make sure that the existing liens on the apartment at the seller’s expense are removed so that buyers will be given an apartment free of liens.
The owners of the rights in the apartment usually use their mortgage money to purchase the apartment. In order to guarantee the bank’s rights and ensure that the seller does not sell the apartment to a third party, a cautionary note will be written on the seller’s rights in the apartment, even before the transfer of rights.
It is in the interest of the buyer to ensure the removal of the bank lien, otherwise he is purchasing a defective apartment, or an apartment with a lien in favor of the bank.
It is possible that the mortgage bank may demand repayment of the loan taken by the seller, and if the latter does not repay the loan, the bank will demand to sell the apartment and receive the repayment of the loan from the proceeds.
Therefore, when making the payments the buyer must make sure that the seller’s mortgage is removed from the apartment.
It is advisable to draft the contract of sale in such a way that it will contain provisions that will ensure that in the bottom line, after making full payments on account of the consideration, the apartment will be handed over to the buyer free of liens.
And how is this matter worded in the contract of sale? The rule is that a monetary payment on the part of the buyers must be conditioned on a precondition for the seller to prove that all the liens of the apartment have been removed.