Legal Ground: We love the house, but where's the deed?

Utilizing the ILA, the gov't is finally taking action against delinquent contractors.

dr  haim katz 88224 (photo credit: )
dr haim katz 88224
(photo credit: )
You've chosen the location, checked on the contractor's references and bought a home with a lovely view. You've paid, you have receipts, you've signed power of attorney for the contractor to register the title in your name, you've gotten bank guarantees from the contractor to protect your payments. You received a key, you decorated, installed appliances, furnished and settled cozily in to your nest. Is it your name on the deed? What is astonishing about hundreds of thousands of home buyers in Israel, is that they will argue assiduously with the contractor over the precise shade of color for the doorposts, but they will remain indifferent to the critical constituent of their acquisition: the title deed. In 1994, a partnership of leading financial fortresses in Israel, including the Dankner Investment group owned by Yitzhak Tshuva and Malibu Israel, initiated an exclusive development in Tel-Aviv's Mashtella neighborhood. They undertook to complete the development in 51 months, which they did. They promised to file for zoning and parceling of the land by the Lands Registry; they did this, too. They committed to sell the apartments and register the properties in the names of the purchasers. Indeed, they sold all the apartments. Thirteen years after starting, nine years after completing construction and nearly five years after completing the zoning, the apartments have still not been registered in the names of the owners. You may say, I have a contract, I have receipts, the companies who sold to me have a contract with the government to lease the land; am I not protected? The answer is not clear-cut. Let's say that even after you moved in, the original owner of the land entered into a business deal that required securitization. He offers several parcels of land as security. Inadvertently, he includes your home among those parcels. It's registered. Through no fault of his own, the deal fails; a foreign supplier did not meet a deadline, a ship loaded with iron rods sank… The matter finds its way to the courts. Liens are placed on the property. The land may be seized by creditors and even sold from under your feet. Over the years, the lack of registration has reached epidemic proportions. A multitude of homeowners don't seem to know or care that ownership of their most valuable asset is not secured legally. The government seems to have finally awoken to this unacceptable situation. Utilizing the Israel Lands Administration (ILA), it is taking action against delinquent contractors. Contractors in Israel must be licensed and are governed by the Builders Registrar, a department in the Construction and Housing Ministry. The ILA has commenced writing letters of warning to contractors who have been negligent in registering their purchasers' apartments. If these building companies do not remedy the situation in a timely fashion, the ILA either lodges a complaint with the Building Registrar or, in some cases, takes legal action in the courts. Some contracting firms have had their licenses suspended and are legally barred from working. Some of the larger companies, Africa Israel-Denya Sibos, for example, have taken resolute steps to correct the situation. But others have not been so responsive. Hundreds of lawsuits have been initiated against less cooperative contractors, many ending in suspension and even compensation. The courts have taken the view that failure to complete title registration is a clear breach of contract and plaintiffs are entitled to compensation even though they cannot show immediate financial damage. Some decisions have awarded as much as NIS 25,000 for delays in registration. Other sanctions initiated by the government: the ILA is reputed to have a "blacklist" of of particularly recalcitrant building companies. The ILA will not sell land rights to these companies, excluding them from developing on ILA land and forbidding them to bid in its tenders. Given that the ILA controls 93 percent of the land in this country, this is quite a persuasive penalty. So what should you do in order to ensure that you are not at risk? If you are not represented by an attorney, keep up on the ownership registration procedure by writing to the contractor's lawyers and demanding to know what the position is. If not satisfied by their answer, do not hesitate to either initiate a lawsuit or lodge a complaint with the Builders Registrar. If you are careful, and persistent, you will be sure to have your feet firmly planted on solid Legal Ground. [email protected] Haim Katz is a senor partner with the Abraham Neeman Law Offices, one of the largest real estate law firms in Israel.