Over the summer, I fell for space. Not just any space, but an apartment that overlooked a picturesque view of Haifa’s port through a fine veil of shady trees. Its massive wooden deck was staged beside the front door, equipped with a state-of-the-art barbecue grill, enough wicker garden furniture to seat a minyan, deck lights and electricity to power a fridge and sink. It was as if I was getting two apartments for the price of one.
But when my lawyer checked the Land Registry’s (Tabu) official government-registered report on the property’s history and current status, this grand wooden deck was found to be, literally, without foundation. The deck stilts were anchored on land that belonged to the entire apartment building and not this property owner. Without proper registration of this deck, the lawyer told me it was a real estate horror story just waiting to happen.
With decades of experience in real estate laws, he was emphatic about avoiding properties that don’t have proper Tabu registration. The lawyer had checked the registration for several potential properties I was considered buying. When properties are listed for less than market price, it could be to encourage a quick sale. Let’s give owners the benefit of the doubt. But sadly, apartments that go for less than market price can also include a paper trail of Tabu registration problems that were ignored.
New to Haifa, a landscape painter’s paradise, I’m in awe of its rugged terrain with breathtaking vistas at every turn from the highest ridges of Mount Carmel. I continued my search for an apartment fit for two artists and a dog. I strolled through neighborhoods and browsed real estate websites, brimming with naivety and fresh optimism. My eyes stopped at one particular apartment for sale, with the kind of fully equipped kitchen found in my dreams, and at a surprisingly affordable price.
I had already been approved for a loan a few weeks earlier, so I was ready to leap. I looked at the apartment the next day, then a second time under different lighting conditions, and called my lawyer to have him examine the Tabu deed. He found it clean – in real estate jargon – the property had been properly registered. Hurray! This was a green light in space that made my heart skip a beat.
Hiring a civil engineer
With all due respect, this is where God came into the story, too. The apartment building’s address was my son’s Hebrew birthday. The street was my son’s Hebrew name. He lives in Japan now, but his best friend in Haifa lived down the street from this apartment, and his parents had actually rented the Airbnb apartment facing “my” front door. How could one thumb their nose at hashgacha pratis (divine providence)?
But, as luck would have it, from the heavens also came the booming voice of my father, a civil engineer, directing me to have a professional inspector check the property out. So I hired an engineer, who brought in special equipment. He found concealed within freshly painted walls water seepage damage and black mold in one bathroom to the tune of NIS 60,000. He broke the news that those walls would have to be torn down to make the repairs.
Benefit of the doubt
I scratched my head. Did the owner really not know about the water damage? Had he freshly painted the walls to conceal the damage? He sure was eager to close the deal and generously dropped the asking price to cover the repairs. We were back on track. I was gratefully ready to sign.
But neither space odysseys nor Shakespearean dramas necessarily end so neatly, do they? There’s nothing worse than doubting the motives of a seller or questioning their integrity. But my lawyer would put it this way: “My job is to keep you away from future lawsuits.” A sobering thought.
I agreed to do the repair work and find the handyman in exchange for the reduction in the asking price. The owner and I got our lawyers to start talking to each other about the contract that would seal the deal. In preparation, my lawyer read the fine print on the Tabu and discovered something he had rarely come across in decades of real estate advocacy. It was an active warning that this apartment was situated in a “dangerous” building. Dangerous, he told me, can range from severe neglect of the common areas, the roof and stairwells, to being condemned and the residents booted out. This felt surreal. Residents were clearly coming and going from what I could see on several visits to see the apartment.
What to do? My lawyer called City Hall to find out the severity of the situation. It wasn’t that dire. The housing department had been sending the tenants’ association, the va’ad, repeated notices to fix a dilapidated roof. But the red flag here was that the notices had been ignored. Not all owners had agreed about the urgency, and so it hadn’t been done. The owner brushed off the repair work as minor, and said he’d get around to do the work himself after I signed the contract. My lawyer, to put it mildly, hit the roof: “Absolutely not!” he said, painting a scenario where I’d inherit the headache of holding the owner accountable to get the repair work done to a level that would meet with City Hall inspection standards. What if he cuts corners and the inspection won’t pass? Worse even, what if the appraiser from the bank found the repair work on the building unacceptable or not even done? I’d be out of a mortgage.
At this point, I took a deep breath and a hard look at all the actors that were now part of this unfolding drama. There was the seller, the mortgage broker, the banker in charge of the loan, my lawyer, the civil engineer, a City Hall inspection department, and a laissez-faire tenants’ association, relaxed to the point of inertia, to potentially deal with. I went back to the mortgage broker to tell him about the danger warning on the building, and he gave me three options: (1) Don’t say anything to the bank and hope it works out. (2) Tell the banker and risk losing the loan. (3) Tell the banker I was ready to work together on finding a way through the problem.
Mission control had spoken. I was going with the lawyer’s counsel: No money would be transferred or contract signed until the repair work was completed. I could lose the apartment if the owner wouldn’t agree to my insistence that he do the repair work before we signed. It was a risk I had to take. I thought I was more of the easy-going type on the trust spectrum. But too many concealed problems had come to the fore. A sleepless night ensued. I woke up to the message that the owner had decided he would find a new buyer. And just like that, fretting over this troublesome apartment went from full throttle to release. It was both a jolt and a relief, to say the least.
Liza Shtromberg, a real estate agent in Haifa, described the troubles as almost predestined, or at least textbook classic: “Let’s say people want to buy a diamond, and they go to the source. If you go to the wholesaler, they’ll sell you second-rate goods because they know that you don’t know what you’re doing. A lot of properties have problems. Realtors know to avoid these places. They know what to ask for. You wouldn’t have been sucked into this process.”
“Let’s say people want to buy a diamond, and they go to the source. If you go to the wholesaler, they’ll sell you second-rate goods because they know that you don’t know what you’re doing. A lot of properties have problems. Realtors know to avoid these places. They know what to ask for. You wouldn’t have been sucked into this process.”
Liza Shtromberg
How do I describe the outcome? I got as far as imagining my paintings on the walls, pots and pans in the kitchen cabinets, and my camellia tree planted in the front yard. Chalk it up to experience and the old caveat emptor – that the buyer alone is responsible for checking the quality and suitability of the house before purchase. Live and, yes, learn. Shoot for the moon. Even if you miss, there’s plenty of space to keep exploring. ■
The writer is the founder of Genesis Art Workshops. She teaches intuitive drawing and painting using an approach that brings the world alive through beautiful colors, vibrancy, and serendipity. www.genesiscards.com/
Mortgage financing 101
Preparing documents to apply for mortgage financing can be simplified by keeping good records. You’ll need to assemble three years of tax returns, bank statements, a credit report and credit card statements from all countries you call home. Doing so helps you know exactly how much you can afford on capital – the down payment – and how much you can pay back on the bank loan.
When purchasing an existing property or constructing a new one, Israeli banks typically provide mortgage financing up to 75% of the value of the home. The emphasis here is on “value.” The bank can turn you down for any number of reasons.
They will send their own appraiser to inspect your property before releasing the mortgage. Let’s say the buyer is selling for NIS 2 million, but the appraisal comes in at NIS 1.5m. You’re out of luck. You’ll receive NIS 1.125m. and not the NIS 1.5m. you might have hoped for. And, as one lawyer was quick to point out, once you sign a contract, you’re liable to pay for the property or incur a stiff penalty. A sobering thought.
How does one even begin to prepare for that eventuality? Ideally, one real estate agent friend advises to be conservative in what you buy. Prepare closer to 50% of the down payment to ward off nasty surprises.
House-hunting checklist
- Get the mortgage approval squared away with a bank or a broker, so you can act decisively when you find a property you want.
- It is preferable to buy a property that has undergone parcellation and is thus fully registered in the Tabu, rather than merely having the owner’s share, which only appears as a share of the property as a whole.
- Do your own research about the kind of neighborhood and lifestyle you want to either start or continue by visiting a property you like under different lighting conditions – morning and afternoon. This way, you’ll get a sense of whether there’s enough light to your liking, as well as noise levels and activities that are not.
- It’s fun to browse the many real estate websites looking at delicious properties, but try to avoid late-night online house-hunting, when brain cells that manage sound judgment are already fast asleep. Property owners can go the extra mile to conceal the obvious – that there are serious flaws in what they are selling.
- Consider using a reputable real estate agent or agency so that you have a buffer in the negotiations. It’s the job of the agent to negotiate for you the most favorable price.
- Think carefully and be circumspect in choosing to directly associate with the apartment owner. Friendliness in the beginning can turn acrimonious when there are serious issues preventing the sale from moving forward.
- Once you’ve found a property to buy, make sure the agent or a real estate lawyer thoroughly checks the property’s Tabu registration before you give the go-ahead to draw up the contract.
- If the Tabu is, in real estate parlance, “clean,” then the next step is to hire a civil engineer to inspect the interior for water damage, water pressure, electrical issues and more.
- Ask the engineer to check the building’s exterior for problems.
- Find out if there’s a tenants’ association – i.e., a person or team responsible for collecting dues to be earmarked for making building repairs in a timely fashion. Some buildings don’t have a va’ad. If there is, find out how much money is currently in the tenants’ association’s kitty.