Do I have to pay the developer’s legal fees when purchasing a new apartment?

In Israel, buying from a developer means entering a legal framework that governs the entire building, not just your individual apartment. As a result, buyers are typically required to participate in certain legal costs related to registering the project and the individual units. These fees are regulated and capped in most cases, and they are separate from the cost of your own legal representation.

What legal and bureaucratic work does the developer’s lawyer perform?

The developer’s lawyer manages the legal and administrative process required to register the building and the apartments. This may include:

• Managing and maintaining the list of purchasers
• Registering the building as a shared property (bayit meshutaf)
• Registering your apartment in your name at the Land Registry (Tabu)
• Handling related registration amendments and filings

Under what conditions can I be charged these legal fees?

As the buyer, you can be asked to participate in these legal costs only if:

• The developer’s lawyer is handling the registration-related actions under the sales contract;
• You agreed (usually within the sales agreement) that the developer’s lawyer will act in connection with the registration proces; and
• The payment relates specifically to registration-related actions and not to general legal representation.

Are there limits on how much the developer can charge?

Yes. In most cases, the law limits the amount that can be charged. There are two categories:

1. Registration management fee for managing and registering ownership rights from the time of sale until final registration in the Land Registry, the maximum legal amount is 300 NIS.
2. Other legal expenses related to registration: If the purchase price of the apartment is up to 4,642,750 NIS, the developer may charge the lower of 5,915 NIS (before VAT) or 0.5% of the apartment purchase price (before VAT). If the apartment price exceeds 4,642,750 NIS, the law does not cap the amount.

For example, if a new apartment is purchased for 4,000,000 NIS, 0.5% equals 20,000 NIS. Since that amount exceeds 5,915 NIS, the developer can charge up to 5,915 NIS plus VAT.

How must the payment be made?

The payment must be made directly to the lawyer, not through the developer, and the lawyer must issue a tax invoice for the payment.

Do I still need my own lawyer?

The developer’s lawyer protects the project. Even though this lawyer may handle registration matters for both sides, he/she cannot provide independent strategic advice to the buyer.

You are strongly advised to hire your own independent Israeli real estate lawyer who works solely for you. Your lawyer will represent you in negotiations, contract review, protection clauses, bank guarantees, construction timelines, penalty clauses, and specification compliance.

Does this apply to resale properties as well?

No. When purchasing a resale property in Israel, you do not pay the seller’s lawyer. Each side pays for its own legal representation.