What Am I Signing?!
All About Reservation Forms
(These are the thoughts of CapitIL Real Estate Agency Sales Director Ben Levene.)
This blog is meant to be purely informational and is not meant to be legal advice.
Clients who are unaware of the purchasing process here in Israel tend to get confused when they are asked to sign a reservation form to purchase in a new building project.
Because you need to do your due diligence before purchasing, you cannot sign the contract right away, but the builder needs to see that you are a serious buyer.
This is why in most circumstances, developers will insist on a reservation form, as this is the way most developers work here in Israel.
What is a reservation form?
A reservation form is declaration that you would like to purchase an apartment. There are a set of conditions that you are declaring you want to buy this apartment with.
These conditions have to meet the builders expectations otherwise they will not accept the form. The form is only signed by the buyer so it is not a binding contract.
Make sure your lawyer reads everything before you sign and gives you advice. An example of a change in the reservation form that your lawyer may want to make is that your money will be returned in any situation you do not buy the apartment whereas the company usually writes it in their favour. Of course, the company may not agree to this.
What you are declaring:
You want to buy the apartment and all the necessary details
You are depositing money (normally in escrow but you must check this with your lawyer) as a show of good faith that you would like to buy the apartment
Once the builder has accepted the reservation form, they will give it to their lawyers, and you will be sent a contract.
The reservation form is only signed by the purchaser, as opposed to a contract which is signed by both parties.
These forms are not a red flag and should not deter you from purchasing as they are completely standard here in Israel.
The forms can be presented in a way that it looks more as a marketing form rather than a legal one, so make sure you get your lawyer to look at it.
This will only take your lawyer about an hour to read and amend which is definitely worthwhile as you do not want to reach negotiations for the actual contract and be limited by something you signed in the reservation form without realizing.
Therefore, always make sure to have the form checked by a lawyer before you sign anything. Once your lawyer approves the form, sign as quickly as possible so as not to lose out on an opportunity.