I’ve been living in Israel since 2002. Throughout this time, I have been renting in Jerusalem. Recently, with the awareness of the rise of anti-Semitism in the U.S., I have had the thought of myriads of Americans making aliyah and gobbling up whatever apartments are available. But even without that, it is a fact that more and more people from abroad are buying apartments in Israel as “insurance,” “just in case” they need a roof over their heads one day.
It’s no joke.
There are many empty apartments in Jerusalem owned by people from overseas who
occasionally show up for a few days out of the year. And their demand for such
properties is driving up prices.
So, a couple of
months ago, I started my foray into buying a place of my own. To find what I am
looking for – 100-or-so square meters, sunny, quiet, and not requiring
extensive renovation – was not as easy as I thought. There were plenty of
apartments on the market, but not what I was looking for. And I wanted to
remain in my present neighborhood.
Finally, I got a
call from an agent about an apartment only a block away from my present
residence. I fell in love with the apartment sight unseen. I was so enthralled
with it that I invited my nephew, who is a bit of a maven when it comes to
architecture, and a friend to inspect the place with me. I was told that I was
the first person to see the apartment after the owner put it on the open
market. I was told that he would not budge on the price. And even though it was
a bit high, I accepted his terms. It was only a matter of a “day or so” that I
would get a confirmation.
But that day
turned into a week. The lawyer for the seller was suddenly not available to
take the broker’s frantic phone calls. Finally, the broker got the name and
phone number of the seller, who lived in Australia, of all places. They say
timing is everything, but when it comes to calling Australia, timing is more
than everything. She finally got through and got the real story. The owner was
trying to sell the apartment to a friend, who had been haggling over the price
for over a year and wouldn’t commit. Finally, at the urging of the Israeli
lawyer, the apartment was put on the open market to nudge the friend to get serious.
The ruse worked – at my expense. The broker was furious, but there was nothing
she or I could do. The apartment was sold to someone in Switzerland who may
have never even stepped into the place, while I lived only a block away.
I continued to
search. This apartment had parking but was too dark. That apartment was too far
away from my shul. Another was too old. Another required too much renovating. A
friend of mine referred me to another broker. After showing me a few prospects,
he mentioned that an apartment was to go on the market soon that seemed to fit
what I was looking for – but I needed to be “flexible” about the owner’s wish
with regards to reporting on taxes. That made me a little uneasy, and I didn’t
sound too enthusiastic.
Two weeks later, I
was led by this broker to an apartment that was similar to the one I had fallen
in love with – only this one was even larger and much more expensive. My first
impulse when I set my eyes on the place was to make an offer, but I resisted. I
went to the Galil the next day, and made an offer the day after that. It was
too late! Some lady beat me to it. I couldn’t believe it – a delay of one day
and it’s too late!
A friend told me
that one of those things in life where you really feel hashgacha pratis (divine providence) has to do with purchasing a
home. Homes are bashert, they say.
That didn’t console me. Another disappointment!
* * *
Several weeks went
by, and the broker called: “The woman who was interested in the apartment
withdrew.” I asked why, and he answered, “She decided that the apartment was
too large for her, and she wanted to live closer to the center of town.” I
believed him. (I later came to doubt that story.) It sounds strange, but as you
get close to buying a big-ticket item priorities become clearer, no?
I was so excited! Hashgacha pratis! The first apartment I
liked was to whet my appetite and enthusiasm for this one!
The way it works
in Israel is that there is not one but two brokers for an apartment; one broker
represents the seller, the other the buyer. They each get two percent of the
purchase price. I found out later that this rule of thumb is not written in
stone, and before they show you an apartment, you can ask and even try to
negotiate with them. Some are open to negotiating while others are not. But
once they show you an apartment, they will whip out a pad which they ask you to
sign, where it is written that you consent to pay two percent. (Note: I am not
suggesting haggle with the broker lechatchila.)
Supposedly, with
two brokers, your broker is on your side, but it’s not so black and white. Your
broker may secretly conspire with the seller’s broker in order to make the
sale. So take their advice with a grain of salt.
I hired a real
estate lawyer with a thick English accent, who spoke so low and so fast that I
asked him to repeat what he said 90% of the time. (As the quote falsely
attributed to Churchill goes, “America and Britain are two countries divided by
a common language.”)
My broker
introduced me to an “associate,” and I didn’t catch on that this was the
seller’s broker. Looking back, the seller’s broker wanted to size me up to see
how serious a prospect I was. He was a bit chasidish
and very heimish. He shmoozed me up,
and we took a tour of the apartment. He pointed out all the improvements that
the owner had done, like the built-in closets and the light fixtures. But the
main addition was the sukkah balcony, mirpeset
sukkah miskapelet. This only-in-Israel contraption is where the railing of
a balcony is replaced by a railing that can be opened, extending the floor area
of the balcony. Because the floor of the balcony above mine created a roof that
would invalidate the sukkah, an extension was necessary to allow a
meter-and-a-half to go beyond the roof covering so that the men have a place to
sit. It requires special authorization from the municipality in order to build
one and is allowed to be used for only seven days of the year. It is built by
an engineering firm and costs anywhere from 25,000 to 50,000 shekels. If I
didn’t have that, my only alternative would have been to build a sukkah on the
roof of the building. And considering the money I was being asked to pay, that
very inconvenient prospect would have been a “no-go” for me.
The owner, who
lived in the States, wanted two contracts. One was for the apartment itself.
The other was for furnishings and refurbishing that were not really part of the
building. That would include items such as appliances. He wanted several
hundred thousand shekels in that second category, which is taxed at a much
lower rate. It included things that were quite dubious, such as the sukkah
extension. (“Theoretically,” the seller’s broker told me, “You can take it with
you if you decide to move.”) The owner also wanted the built-in closets and the
light fixtures included on that list.
My lawyer warned
me that I was playing with fire. An audit by the Israeli tax authority would
question a sukkah extension, attached to the building, as “portable.” And the
price estimates of the other items were ridiculously sky high. All this
wiggling would have saved the owner a measly few thousand shekels. Why get in
trouble with the law? But such was the mentality. I wrestled with this request
of the seller for a few days. I brought in an interior decorator, who estimated
the value of the closets and fixtures to be 60,000 shekels at the most, and
even that was a stretch. She told me that the sukkah balcony was definitely not
to be included. Finally, I offered to pay an additional $20,000 to make up for
the “loss” to the owner, and the owner acquiesced.
* * *
In the contract it
stated that the property must not have any outstanding legal issues, such as
who actually owns the property and building code violations. As far as I knew,
once the hurdle of the exaggerated tax break was overcome, we were close to
signing. My lawyer and the broker told me that it was time to get an engineer
to inspect the apartment. My lawyer had no one to suggest. (A bit unusual for a
real estate lawyer, no?) But a broker friend gave me two numbers. Both charged
4,000 shekels and would take a few days to get to work on the job. There was a
lot of pressure from the seller’s broker to sign the contract quickly. (He
wanted me to sign only a few days after I saw the apartment!) I found out later
that the owner was in no hurry, just Mr. Heimish. “My” broker suggested an
engineer that he worked with. I called him. He was available right away and
charged only 2,000 shekels (hmmm?). He came in, made an assessment, and wrote a
report. Except for a small plumbing issue, the apartment was sound, and he saw
no violation of building codes.
We were moving
closer to signing. Now I had to find a way to wire a huge amount of money to my
Israeli bank and have it converted into shekels. I contacted IsraTransfer, one
of two recommendations I was given, to do the job. Since 9/11, transferring
large amounts of money worldwide is no longer an easy matter. The banks are
very afraid of money laundering. I needed documents from my accountant and
portfolio manager, and I had to fill out forms at IsraTransfer.
Finally, I took a
big gulp and instructed my money manager to make a withdrawal of several
hundred thousand dollars. The money would initially be used to pay off the
seller’s mortgage on the apartment and purchase taxes. Once the money came in,
the contract would be signed. I expected the wiring process to take two days.
It took two
nail-biting weeks.
A few months
earlier, the brokerage firm merged with LPL Financial for the purpose of
improving technology. What I was about to find out was that they no longer want
to service clients who live abroad. (This is now a scare for a lot of investors
who live in Israel.) When I made the wire request, the company discovered my
Israeli residence. I was therefore a big no-no. It took gargantuan efforts by
my portfolio manager and her supervisor to get this transfer through. And I
don’t even know if they will retain my account as long as I am a trustee. Here
I was, at the cusp of purchasing an apartment, and not even sure I would be
able to use even a dollar of my savings. What a message coming before Rosh
Hashanah!)
* * *
In the meantime,
back on the ranch, while waiting for the transfer, my lawyer, looking at the tabu (land registry), suspected that
something fishy was going on. Checking the city records, he found that the
seller was guilty of several building violations. The seller’s lawyer, perhaps
a bit surprised himself at being in the dark, checked into the matter. He wrote
my lawyer that the charge was made way back in 2013 and was withdrawn by the
municipality in a court case in 2015. “It was so long ago that the seller’s
broker had forgotten about it.”
Between my
lawyer’s discovery and the delays in the transfer, I had my share of sleepless
nights. With this reassurance, I breathed a sigh of relief. The money, I
believed, would be coming in any day now. But as Yogi Berra remarked, “It ain’t
over ’til it’s over.” My lawyer, under the (Israeli) Freedom of Information
Act, requested clarification on this matter from the municipality. A few days
later, he got a letter in the mail. There were criminal proceedings against the
owner since 2017!
The seller’s
lawyer sent an email with a whole spiel in reply. “This was resolved in 2015! I
even recall that there were rumors flying around that the reason the
municipality dropped the charges was because sukkah balconies were becoming
more and more common, and they didn’t want to set a precedent.”
My lawyer reminded
the other lawyer that the date cited in the city’s letter to him was 2017 – to
which the other lawyer had no rebuttal.
“My” realtor
called, this time with his boss on the phone. Whenever it was an important
call, the less-experienced-more-experienced duo got together. “My advice to you
is to go ahead and make the purchase,” the boss told me. “Even my lawyer would
have advised me as such. It has been a few years, and the city hasn’t taken any
action. So many people have put up sukkah balconies illegally, and nothing ever
happens.”
I told the boss it
might be time to get another lawyer. It was at that moment that I realized that
“my” realtors were not really on my side. That is, they were on my side to help
me purchase the apartment, whether it was good for me or not! Still, I
wondered, maybe they were right. The risk would be small, and this was a dream
apartment for me.
“Why doesn’t the
owner take care of it?” I asked my realtor. “He said that he doesn’t want to
get involved,” was the reply. Another interesting thing I noticed about “my”
realtors was that they were always in contact with the seller’s lawyer and very
hesitant to contact mine. What does that say about their interest in my
welfare?
I spoke to my
lawyer, and he advised me not to buy, but he suggested I seek out a second
opinion. He was concerned that maybe he was being too cautious.
* * *
I was hosted on
Friday night by some neighbors. They were new olim, and they told me their own set of nightmare stories of buying
an apartment. They recommended someone they said was a superb real estate
lawyer in Netanya. Before contacting her, though, I took a short trip on a
minibus to the Shomron to see what archaeologists claimed was the alter built
by Yehoshua near the city of Shechem. On the bus was a retired realtor who had
been in the business for over 30 years. I told him my story, and this is what
he said: “Never buy a property unless it is 100% ‘clean’ of any legal issues.
Period.”
“But it has been
so many years and nothing happened!” I protested.
“The city does
take years to act,” he said. “But do you want to spend a fortune on an
apartment only to find out a few years later that you will have to move again?”
I called the
second lawyer from Netanya. She was puzzled about why the city had withdrawn,
then reinstated, the demolition order. She told me she would call a colleague
who understood the Jerusalem municipality well.
A few minutes
later she got back to me: “He told me that, when the city withdraws a complaint
in a court case, it is always because it has reached a settlement with the
defendant that they would agree to make the necessary changes. When the owner
of the apartment does not abide by the agreement, the city will reinstitute its
demolition order. Furthermore, it may take years for the city to act, but they
will in the end – especially in certain neighborhoods. And your neighborhood is
one of them.”
This lawyer also
told me that one should always get a good shammai
(property assessor) first to determine any legal issues and only then get an
engineer to check the structural integrity. She suggested a shammai who knew the Jerusalem
municipality well and who could tell me what my chances were to get the
demolition order nullified.
* * *
I was sick and
tired of being sick and tired. I wanted to throw in the towel. Nevertheless, I
called the new shammai and gave him
the address of the apartment. Before he could enter the apartment, I needed to
coordinate with the people currently renting the place. They did not get back
to me. The shammai went ahead and
checked the building from the outside. He told me that he found three building
code violations. (Why didn’t the engineer? He had the same plans in his
possession!?) He told me that it was possible to request a new tabu that would legalize the sukkah
balcony. It would require the approval of at least half of the residents of the
building. The chances were that, more often than not, that the city would
approve. But it was not a guaranteed outcome.
The chase for this
apartment was over. I called my realtor. Later, I got the following message
from him:
Dear Sam,
[My boss] and I
are both truly sorry that things didn’t work out with the apartment. We can
faithfully say that along the entire way we were doing our best to serve your
interests and our long line of satisfied clients will testify to that. We see
and remember things differently from what you described. But as you said,
you’re no longer interested in the apartment, thus there is no use getting into
that now.
We wish you the
best. Shavua tov
* * *
The Talmud says
that the Land of Israel is acquired through tribulation. I hope that this
article will not discourage anyone from moving to Israel. I have never
regretted my making aliyah for even a
single day in the 19 years I am here. I was told that these kinds of things are
standard in the real estate business. There are scrupulously honest people out
there and truly competent professionals who know what they are talking about.
Good luck in finding them.
