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Buying Off-Plan in Israel: Payments, Index and Delivery

Q: Can the developer raise the price after signing?

Only through the linkage clause and for changes you order. Any other price increase requires your agreement.

Q: What if the developer delivers early?

The contract usually allows early delivery on notice, and the balance becomes payable on the earlier date. Make sure you can fund the final instalment at short notice.

Q: Does compensation for delay apply if I am abroad and did not plan to move in?

Yes. The statutory compensation is based on the apartment's rental value, not on whether you intended to live there.

Construction site with a tower crane in Israel

Buying an apartment before it is built means the contract, not the building, is what you are paying for. Three clauses carry most of the risk: the payment schedule, which decides how much of your money is exposed and when; the linkage clause, which can change the price between signing and delivery; and the delivery date clause, which decides when you get the keys and what you get if you do not. The Sale (Apartments) Law 5733-1973 sets a floor of protection that the developer cannot contract out of, and the rest is negotiation.

The payment schedule

Israeli developer contracts set out instalments either by date or by construction milestone. A milestone schedule, tied to stages such as completion of the foundations, the structure or the finishing works, keeps payments in line with progress and is generally better for the buyer. A calendar schedule can have you paying most of the price while the site is still at excavation. In both cases the Sale (Apartments) (Assurance of Investments of Purchasers) Law 5735-1974 requires each payment to be secured, usually by a bank guarantee issued against a payment voucher.

Ask for the schedule as an annex, with the share of the price at each stage, and check how the last instalment is tied to delivery.
Check whether VAT is included in the stated price and who bears any change in the VAT rate.
Check what triggers a milestone payment: a certificate from the project's supervising engineer, not the developer's own notice.

Construction-index linkage

Most off-plan contracts link the unpaid balance to the construction input price index published by the Central Bureau of Statistics. The index tracks the cost of building materials and labour and is published monthly. When it rises, each future instalment is increased by the change since the base month stated in the contract. Over a multi-year build this can add a meaningful amount, which is why linkage is a price term, not a formality.

Identify the base index in the contract and check that it is the index known at signing, not an earlier one.
Read how linkage is applied to delayed payments and whether a decrease in the index reduces the price or only increases are counted.
The law has been amended in recent years to limit how index linkage applies in developer contracts; ask your lawyer what the current rule is and whether the contract complies.
Linkage usually stops on the payment date, so paying an instalment early can cut the exposure, if the contract allows it.

The delivery date clause

The Sale (Apartments) Law requires the contract to state a delivery date and gives the buyer compensation if the developer is late beyond a grace period set in the law, calculated by a formula based on the apartment's rental value. The developer may not waive this in the contract; a clause that purports to do so is void. What the developer can do is define the date carefully, and this is where buyers abroad get caught.

Watch for a delivery date defined as a number of months from a future event, such as the building permit or the start of works. If the permit has not been issued, the date is floating.
Watch for lists of 'force majeure' events that extend the date; the law allows extensions only for circumstances outside the developer's control, and courts read such clauses narrowly.
Delivery depends on the occupancy certificate (Form 4) under the Planning and Building Law 5725-1965; ask who confirms it and how you will be notified abroad.
Ask how the delivery protocol is signed if you are not in Israel, and whether your lawyer or a representative may sign it.

Specification, warranty and changes

The Sale (Apartments) Law requires the developer to attach a technical specification (mifrat) in the form set by regulations, listing materials, fixtures and areas. It also gives the buyer a statutory inspection period and a longer warranty period for defects, with the length depending on the type of defect. Changes you order from the developer are priced separately; keep every change order in writing and signed, and ask whether a change affects the delivery date.

Registration after delivery

The developer must register the condominium and your apartment in the Land Registry within the period the law sets, and until then your rights are recorded with the developer or a housing company and protected by a caveat. Regulations under the Sale (Apartments) Law cap what the developer's lawyer may charge you for this registration. Keep a copy of every payment voucher and guarantee; they are the evidence of what you paid if anything is disputed.

Common mistakes

Comparing developers by headline price without comparing linkage and payment schedules.
Accepting a delivery date tied to a permit that has not been issued, with no long-stop date.
Paying instalments outside the voucher system to save time.
Signing the delivery protocol through someone who did not inspect the apartment.
Not checking that the specification matches the marketing brochure.

FAQ

Can the developer raise the price after signing?