Memorandum of understanding

During your stay in Israel, you found the apartment you always dreamt of. Unfortunately, you are leaving very soon.

The seller, an individual or a real estate professional, proposes that you sign a memorandum of understanding (pre-contract) of one or two pages before you leave the country. He comforts you by assuring that the final contract will be signed in a few days.

Do not let him take advantage of the situation. We strongly advise against signing such a memorandum of understanding:

• The memorandum of understanding binds you as a final and formal contract would, even if your lawyer has not yet checked the seller's rights.
• Signing a memorandum of understanding prevents any further negotiation on such important characteristics of the sale such as the main features of the apartment, the seller's legal responsibilities or the possibility to cancel the transaction, in case of defaults or others.
• The memorandum of understanding is considered as a final contract taxwise. Although the final contract has not yet been signed, you must file a tax form and pay the purchase tax.

Our advice is to execute a power of attorney in favor of a relative or a lawyer in Israel. The latter will conduct the negotiations in your name and sign the purchase contract on your behalf.