Buying an off-plan apartment from a developer carries significant risks. The buyer makes payments throughout construction before the property exists. To protect buyers from developer insolvency, Israeli law mandates the Sale Law (Apartments) (Assuring Investments of Apartment Buyers).
What Guarantees Are Mandated by the Sale Law?
The law states a developer cannot accept payments exceeding 7% of the purchase price unless they secure the funds using one of five methods. The two most common are a **Bank Guarantee** issued by the project's lending bank, or an **Insurance Policy**. These ensure buyers get all paid capital back if the builder collapses.
The Escrow Voucher System (Pinkas Shovarim)
In project finance setups, buyers never pay developers directly. Payments must be deposited strictly using designated vouchers into the project's secure escrow account. Depositing a voucher triggers the automated issuance of a Sale Law guarantee. Paying in cash or via unauthorized checks is strictly forbidden.
What to Check Before Contract Signing?
During negotiations, your attorney will verify that the agreement defines clear terms for issuing guarantees, precise delivery timelines, and ensure the bank issues a waiver letter (Michtav Hachraga) exempting your apartment from the bank's general land mortgage.