| 1. In this law - | Definitions (Amended 1976) (Amended 2008) |
| " Apartment " - a room or set of rooms for residence, business or any other purpose; | |
| " A loan for the purchase of an apartment " – a loan given by a banking corporation or any other corporation for the purpose of purchasing an apartment and in order to guarantee its repayment a mortgage or a ………. Were registered relating to the rights to the land; | |
| " Financial ……. " – Funding of a construction project by a banking corporation in the framework of a loan agreement between the seller and the banking corporation; | |
| " Sale " - including the grant of a lease for a period of more than 25 years, an undertaking to sell or to grant a lease as aforesaid or to procure a sale or the grant of a lease as aforesaid, and an association act, as defined in the Land Appreciation Tax Law 1963; | |
| " Seller " - a person who sells an apartment built or about to be built by himself or through another on land owned by himself or by another in order to sell it, including a person who sells an apartment bought by him from the person who built it or is about to build it as aforesaid in order to sell it, but not including a person who sells an apartment not built by himself or for the sale of which he has received no consideration from the purchaser. | |
| " Price of Apartment " – any amount that a purchaser is obliged to pay to the seller in the sales agreement relating to the purchase of the apartment; | |
| "Person in charge" – The person appointed according to the provisions in Section 3d as the person in charge ……. | |
| " Supervisor " -, and "Proper bank management instructions" – as defined in section 5 to the Banking Directive, 1941 (hereinafter: banking directive ); | |
| "Funding the construction project" – the funding method according to which the seller conducts the entire financial operation of his construction project in a separate bank account used only for this purpose (hereinafter: ….. account ) | |
| "Construction project" – construction of an apartment or a building by a seller; | |
| "Banking Corporation" – as defined in the Banking Law, 1981 | |
| "…..Banking Corporation" – a banking corporation providing financial ………. | |
| "The Minister" – the Minister of Construction and Housing. | |
| 2. A seller will not receive from a purchaser, on account of the price of the apartment, an amount that exceeds 75% of that price, unless he has complied with one of the following, all in spite of the statements in the sales agreement. | Assurance of Purchasers Monies (Amended 1976) (Amended 2008) |
| (1) he has provided the purchaser with a bank guarantee as security for the return of all the monies paid to him by the purchaser on account of the price, in the event that he is unable to transfer to the purchaser the ownership of or any other right in the apartment, as agreed in the sales contract, due to a lien imposed on the apartment or on the land on which it is being built or due to a freezing injunction or due to a receiving order, winding up order or order to appoint a receiver made against the seller or against the owner of the said land; | |
| (2) he has taken out insurance from an insurer, as defined in the Financial Services (Insurance) Control Law 1981, approved for this purpose by the Commissioner of Insurance, as security for the repayment of all the monies provided in paragraph (1), with the purchaser named beneficiary under the insurance policy, and he has paid the insurance premium in advance; The Minister of Finance may determine in this matter the form of the insurance policy; | |
| (3) he has imposed a lien on the apartment or on a proportionate part of the land on which it is being built with a first mortgage in the purchaser's favor or in favor of a trust company approved for this purpose by the Minister of Housing, as security for the repayment of all the monies provided in paragraph (1); | |
| (4) he has entered, in respect of the apartment or of a proportionate part of the land on which it is being built, a caveat remark as to the sale of the apartment, in accordance with section 126 of the Land Law 1969, and no lien, attachment or third party right that ranks in priority to the caution is registered in respect of the apartment or land; | |
| (5) he has transferred to the purchaser ownership of or any other right in the apartment or in a proportionate part of the land on which it is being built, as agreed in the sale contract, the apartment or land being free from any lien, attachment or third party right. | |
| 2A. A seller who has assured the purchaser's monies under Section 2(1) or (2) may replace the security with one of the kinds of security under Section 2(3), (4) or (5), unless another kind was stipulated in the sale contract, provided that construction of the apartment has been completed and the purchaser has been given possession; the provisions of this Section will not derogate from the provisions of Section 3. | Replacement of Security (Amended 1976) |
| 2A1. (a) The seller of an apartment will not sell to the purchaser, unless he notified the purchaser in writing, on the date of the signing of the sales contract, of his right according to this law of the security of the monies paid and the … according to the law in this matter. | Duty to notify in writing (Amended 2008) |
| (b) A Seller who has not contacted a banking corporation to grant a financial ….., will notify the purchaser in writing, until the date of the sales contract, the Minister is authorized to determine a provision with regard to the method and date of notification. | |
| 2B. (a) If the land on which the apartment sold is built on Israel land, within the meaning of that term in the Basic Law: Israel Lands, the seller only has to assure the purchaser's monies under Section 2 for a period ending at the time of fulfillment of all of the following: | Assurance of Monies of a Purchaser of an Apartment Built on Israel Lands (Amended 1976, 2009) |
| (1) construction of the apartment has been completed in accordance with the sale contract; (2) possession of the apartment has been given to the purchaser; (3) a contract has been signed between the purchaser and the Israel Lands Administration (hereinafter: Administration), by which the Administration undertakes to have the purchaser registered as the apartment's lessee for a period of more than 25 years, free from every lien or obligation to set a lien, attachment or other third party right, other than a lien or obligation for a lien entered against the purchaser. (b) A contract referred to in Paragraph (3) of Subsection (a), signed between the purchaser and the Administration between February 2, 1975, and March 30, 1979, is deemed to include an undertaking by the Administration, as stated in the said paragraph. (c) If the Administration is ordered to compensate the purchaser for the non-fulfillment of its undertaking under Paragraph (3) of Subsection (a), the seller will indemnify the Administration, unless he proves that the Administration is responsible for the cause resulting in the said compensation. | |
| 3. If the monies paid or to be paid by the purchaser of any apartment to the seller have not been secured as provided in Section 2(1) or (2), then, notwithstanding any provision of the sale contract, the purchaser is not be bound to make any payment on account of the price of the apartment, in excess of such amounts as prescribed in regulations. | Restrictions on Payments |
| 3A. (a) All expenses incurred for payments of fees, and for securing the monies of the purchaser, under this Law, (hereinafter: the expenses) shall be borne by the Seller. | Payments of Expenses by the Seller (Added 2000) |
| (b) The provisions of Subsection (a) will not apply, if, according to the sale contract, the seller must pay the expenses of the purchaser, the insurer or the bank guarantor, as the case may be, gave a receipt in the name of the purchaser. | |
| 3B.(a) A ……….banking corporation and Seller who have ……..in an agreement to provide financial …..will act solely in this manner in the matter of the construction project in the agreement. | |
| (b) The ……… agreement of the construction project between the … banking corporation and the seller contains their duty to act in accordance to the ………..in accordance to the provisions of this Section, as well as additional details as determined by the supervisor of proper banking management regulations. | |
| (c) The ……..banking corporation will issue a voucher book for payment of each apartment in the construction project, will transfer it to the seller and deposit payments for the apartment, including the payments transferred by the corporation which granted the purchaser a loan for the purchase of the apartment, in the ……… account by means of a voucher book only; vouchers will include details as determined by the supervisor of proper banking management regulations. | |
| (d) The seller will provide the voucher book to the purchaser and will receive solely from him the payments that the purchaser will remit for the apartment; remittance by voucher constitutes an irrevocable order by the seller to the ……… banking corporation to provide a bank guarantee in favour of the purchaser. | |
| (e) A ………banking corporation will provide a bank guarantee in the amount paid by the purchaser according to the vouchers within 14 business days from the date paid as mentioned, or will ensure that other security was provided in favor of the purchaser in accordance to the provisions in Section 2; there is nothing stated in this provisions that will prejudice the rights of the banking corporation in accordance to the law. | Financial …. Of the Construction Project (Amended 2008) |
| 3C. In the event the banking corporation or another corporation provided a loan to the purchaser of the apartment, it is obliged to – | |
| (1) Notify the purchaser in writing of this regulation and of its rights to guarantee the monies that were remitted to the seller for the apartment; | |
| (2) Remit the loan monies to the seller only after ensuring that a security was provided in favor of the purchaser in accordance to the provisions in Section 2 or the duty of the seller in writing in providing the security as mentioned. | |
| 3D.(a) The Minister will appoint a person in charge amongst his office employees, in the matter of the sale of the apartments according to which this provision applies. | |
| (b) The person in charge will manage a register in which the name of the purchaser of the apartment will be detailed, name of the seller, details of the real estate, and the provider of the security and the type of security provided for the benefit of the purchaser in accordance to the provisions in Section 2. | |
| (c) (1) Under the provisions in sub-section (d), the person in charge will ……………….. relating to the provisions of this law, including a contravention of these provisions by the seller; | |
| (2) If the person in charge finds the …………. to be justified, he will notify the ……… and the seller; the person in charge will detail in his notification the findings of the enquiry and the method of amending the flaws he discovered (hereinafter: findings of the enquiry); | |
| (3) If the person in charge finds the ………. Was not justified or does not require an investigation, he will notify same to the ……….. | |
| (4) The decisions of the person in charge in the ………….. and the findings of the enquiry: | |
| (a) Will not contain anything that would grant the … or another party a right or …. In the court or ……….. | |
| (b) Will not prevent anything that would grant the … or another party the use of a right or …. ……………….. | |
| (d) The person in charge received a request in a matter relating to the banking corporation, he will transfer same to the supervisor for investigation; the supervisor will investigate the request as per Section 16 of the Banking Law (customer service), 1981, and if he finds it justified, he will notify the …., the banking corporation and the person in charge; and in spite of the statement in said law, the supervisor will specify in his notification the findings of the investigation and the manner of amending the flaws that he discovered. | |
| 3H. The seller will transfer to the supervisor, in close proximity to the signing of the contract, these details with regard to each apartment in his construction project: name of purchaser of the apartment, name of seller, details of real estate, provider of security and type of security given to the benefit of the purchaser in accordance to Section 2. | |
| 3I. In the framework of his position, the person in charge – | |
| (1) Will demand from any person or body relating to the matter to provide him with information and documents relating to the sale of the apartments as per provisions of this law; | |
| (2) Enter the premises of the seller and demand an investigation relating to the upholding of regulations as per this law, will declare same in writing before the seller, and will notify the purchaser and the supervisor. | |
| 3J. (a) The person in charge reveals that the seller contravened his duty to secure the monies of the purchasers as required by this law, he will declare same in writing before the seller, and notify the purchaser and the supervisor. | |
| (b) The person in charge reveals that a corporation which is not a banking corporation that provided the loan for the purchase of the apartment, contravened its duties as per Section …, ……………. | |
| 3K. The person in charges reveals that a ……. banking corporation breached its duties as per Section 3b, or a banking corporation that provided a loan for the purchase of an apartment breached its obligations as per Section 3c, gives him the right ………………….to order the banking corporation that breached the law to amend the violation, and he has the right to order the method of correcting the violation, as he sees fit. | |
| 3L. (a) The person in charge will submit to the Minister and the Finance Committee of the Knesset, once annually, an account of their activities, carrying out the provisions of this law and reporting the findings of this investigation, including the findings revealed by the person in charge transferred to him, said report will include names of the sellers that breached the provisions of this law. | |
| (b) Without derogating from any of the provisions in this law, the report as per sub-section (a) will be open to the perusal of the public in the offices of the person in charge or in any other way as determined by the Minister. | |
| 4. (a) The contravention of any one of the below stated, is liable to a penalty as stated in Section 61(a)(3) of the Penal Code, 1977 (hereinafter: penal code): | |
| (1) Does not reveal to the purchaser his right in accordance to this law to secure the monies that he remitted, contrary to the provisions of Section 1 or 2; | |
| (1a) Received from the purchaser payments on account of the apartment price, without having his money secured as per the provisions of Section 3; | |
| (2) Did not report to the person in charge of the details of the sale, as contrary to the provisions of Section 3(e); | |
| (b) The effecting of one of the acts stated below, will result in imprisonment, doubling the penalty set out in Section 61(a)(4) of the Penal Code: | |
| (1) The seller received on account of the price of the apartment, an amount exceeding 7% of the cost without securing his money in accordance to the provisions of Section 2: | |
| (2) Did not provide the purchaser with a voucher book to received payments which were not by means of the voucher book, contrary to the provisions of Section 3b(d); | |
| (c) The execution of one of the below stated, will result in liability to double the penalty as set out in Section 61(a)(4) of the Penal Code: | |
| (1) Did not issue a voucher book or did not deposit the payment made by means of the voucher book in the …account, contrary to the provisions of Section 3b(c); | |
| (2) Did not provide a bank guarantee or did not ensure that other security was given, contrary to the provisions of Section 3(b)(e); | |
| (3) Did not notify the purchaser of his rights to secure the monies he remitted to the seller or did not ensure that a security was granted to the purchaser or any written obligation of the seller, contrary to the provisions in Section 3c. | |
| (d) If the seller is convicted with a violation as per sub-sections (a) or (b), the Court is authorized to disqualify him from participation in tenders in accordance to the Tender Law, 1992, conducted by the State or government corporation as defined in said law, for a period not exceeding 5 years; | Obligation of a Corporation providing a Loan to purchase an apartment (Amended 2008) |
| (e) The seller is convicted of …………….(hereinafter – Law of Registration of Contractors) in a violation as per sub-sections (a) or (b), the court is authorized to disqualify him from registration in the Registrar, and if registered, to cancel his registration, for a period to be determined by the Court. | |
| 4A. (a) A Functionary in a corporation is obliged to supervise and do everything possible to prevent violations of Section 4(a) or (b) by the corporation or his employees, a violation of this law is liable to one half of the penalty as stated in Section 4(a) or (b) accordingly; (hereinafter: functionary) – an active manager in the corporation and partner, save a limited partner or a clerk in the corporation responsible for the area where the violation took place. | |
| (b) The corporation was convicted with a violation as per Section 4(a) or (b), based on a functionary of the corporation violating his duty as per that stated in the section, unless it is proven that he did all that was possible to fulfill his duty. | |
| 4B. (a) Any violation of these provisions by the seller or the corporation - the person in charge will be imposed with a levy in accordance to the provisions in Sections 4c and 4.. in an amount as detailed…. | Appointment of a person in charge, administration of registration and Customer Service (Amended 2008 |
| (1) Failure to report information relating to the sale of the apartment by the seller to the person in charge, contrary to the provisions of Section 3d –a levy in the amount of NIS 25,000; | |
| (2) Sale of an apartment to a purchaser by the seller without a written notification to the purchaser regarding his right in accordance to this law, contrary to the provisions of Section 1 and 2 – a levy in the amount of NIS 50,000; | |
| (3) Not advising the purchaser regarding his rights to secure the monies he paid to the seller or … a security for the benefit of the purchaser of a guarantee in writing by the seller for the granting of a security, contrary to the provisions of Section 3c – a levy of NIS 50,000; | |
| (4) Non transference of a voucher book by the seller to the purchaser of receipt of payments for the apartment, contrary to the provisions of Section 3b(d) – a levy in the sum of NIS 200,000; | |
| (5) Receipt of an amount exceeding 7% of the price of the apartment, from the purchaser to the seller, on account of the price of the apartment, contrary to the provisions of Section 2 – a levy of NIS 400,000; | |
| (b) The violation of the following provisions by the banking corporation will result in the person in charge to impose a levy in accordance to the provisions in Section 4… in the amount of NIS one million: | |
| (1) Non issue of a vouchers book or not depositing payments by means of a voucher book in the … account, contrary to the provisions of Section 3(b)c; | |
| (2) Non issue of a bank guarantee or not advising of other security, contrary to the provisions of Section 3(b)c; | |
| (3) Not advising the purchaser of his rights to secure the monies paid to the seller or not ………….. that a security was given to the benefit of the purchaser or seller's duty to put in writing with regard to the granting of a security, contrary to the provisions of Section 3c; | |
| 4C. Provided that the person in charge has reasonable basis to assume that the person responsible as per the provisions of law in Section 4b transgressed the provision stated (hereinafter: the tortfeasor), he is authorized to notify him of his intention to impose a levy (in this law – intention to impose a charge); in said notification the person in charge will state, among others, the following: | |
| (1) The act constituting the violation; | |
| (2) The rate of the levy and the period of payment; | |
| (3) Right of the transgressor to state his claims before the person in charge as per the provisions of Section 4d; | |
| (4) The additional amount to the levy of a continuing violation or repeat violation as per provisions in Section 4g. | |
| 4D. The tortfeasor in receipt of the intent to charge is authorized to state his allegations, in writing, before the person in charge, on the matter of imposing a levy and the matter of its rate, within 30 days of the date of transference of notification. | |
| 4E. (a) Following the tortfeasor's statement of his claims before the person in charge as per provisions in Section 4d, the person in charge, following his deliberation of the claims made, will decide whether to impose a levy, and is authorized to reduce the amount of the levy as per provisions of Section 4h; | |
| (b) (1) The person in charge decides to impose a levy on the tortfeasor as per sub-section (a) ; the person in charge will serve a notification of demand to pay the levy (hereinafter: notification of charge); in the notification the person in charge will specify, among other things, the amount of the updated levy and the period of payment; | |
| (2) The person in charge decides not to impose a levy on the tortfeasor as per sub-section (a), he will notify same to the tortfeasor. | |
| (c) The tortfeasor did not request to state his allegations as per provisions of Section 4d, within 30 days of receipt of the notification of the intention to charge, this notification will be deemed, upon termination of the 30 day period, as a notification of charge served to the tortfeasor ………; | |
| 4F. (a) The levy will be in the updated amount on the date of the transference of the notice of charge, to the tortfeasor who did not state his claims before the person in charge as per Section 4d, - on the date of the transference of notice relating to the intent to charge; an appeal was submitted on the decision of the person in charge as per Section 4e, the appeal committee ordered a stay of payment of the levy – the levy will be in accordance to the updated amount on the date of the appeal decision. | |
| (b) The amount of the levy will be updated on 1st January of every year )in this sub-section - date of update) in accordance to the rate of increase of the index known on the date of the update as compared to the known index on the date of the beginning of this law; the amount will be rounded to the nearest figure ………….; in this matter, "index" the consumer index released by the General Bureau of Statistics. | |
| (c) The notice relating to the updated levy in accordance to sub-section b, will be released to the government records. | |
| 4G. (a) In an ongoing tort, the levy will bear ………….. for each ongoing day of the tort. | |
| (b) …………….. | |
| 4H.(a) The person in charge is not authorized to place a levy that is less than the set amounts in this chapter, but rather in accordance to the provisions of sub-section (b). | |
| (b) The Minister, in agreement with the Minister of Justice, is authorized to determine cases, circumstances and considerations in which the amount of the levy will be lower that the amount set in this chapter, at the rates determines. | |
| 4I. The levy will be remitted within 30 days of the transference of the notice of charge as stated in Section 4E. | |
| 4J. A levy that was not remitted on time, will bear for the period of delay, linkage and interest differentials as per the Law of Interest and Linkage, 1961 (hereinafter: linkage and interest differentials) until its remittance. | |
| 4K. A levy will be collected by the State Treasury, and will be subject to the Tax Ordinance (collection). | |
| 4L. (a) Payment of the levy … from the …. Liability of a person who contravenes the provisions in Section 4B. | |
| (b) An indictment was submitted against a tortfeasor who contravenes the provisions in Section 4B, will not be charged with a levy and if he paid – the amount will be returned to him with added interest and linkage from the date of payment until the date of the refund. | |
| 4M. (a) A person in receipt of a notice of charge is authorized to appeal before an appeal committee which was established under Section 10 of the Law of Contractors Registration (in this chapter – appeal committee); an appeal under this section is subject to the provisions of the … authority, … and … appeal as per the law stated. | |
| 4N. (b) The appeal will be submitted within 30 days of the date of submission of the notice of charge. | |
| (c) The notice of appeal does not permit a delay in payment of the levy unless it was so ordered by the person in charge or another appeal committee. | |
| (d) If the levy was paid and the appeal approved, the amount of the levy with added linkage and interest differentials shall be refunded from the date of payment until the date of refund. | |
| 4O. Provisions of Section 4C till 4N will apply to a banking corporation according to these changes: the authority of the person in charge according to these same sections will apply to the supervisor and the notice of charge can be appealed according to the provisions of Section 14.. of the Banking Decree. | Duty of Seller to report to the person in charge (amendment no. 4) Amended 2008 Authority of Supervision (amendment no. 4) Amended 2008 Authorities of person in charge towards the seller or the infringing corporation(amendment no. 4) Amended 2008 Duty of a Functionary (Amended 2008) Placing a Levy (amendment no. 4) Amended 2008 Notice of Intent to charge a levy (amendment no. 4) Amended 2008 Updated amount of Levy (amendment no. 4) Amended 2008 An ongoing tort and a repeat tort (amendment no. 4) Amended 2008 Reduced amounts(amendment no. 4) Amended 2008 Date of payment of levy amendment no. 4) Amended 2008 Linkage and Index Differentials amendment no. 4) Amended 2008 Collection amendment no. 4) Amended 2008 Criminal Liability amendment no. 4) Amended 2008 Appeal amendment no. 4) Amended 2008 Placing a levy on a banking corporation amendment no. 4) Amended 2008 |
| 4. A seller who contravenes the provisions of Section 2 is liable to imprisonment for a term of six months or to a fine of IL 100,000, and, if he was a contractor for an engineering construction works within the meaning of that term in the Contractors for Engineering Construction (Registration) Law 1969, the court may disqualify him from registration in the Registry or, if he is already registered, cancel his registration for such a period as it will prescribe. | Penalties |
| 5. The provisions of this Law will not apply to an apartment in respect of which the sale contract was made before this Law came into effect. | Scope |
| 6. The Minister of Housing is charged with the implementation of this Law and he may prescribe regulations for its implementation, including regulations which prescribe ways of proving, for purposes of Sections 2A and 2 (b) (1) - that construction of an apartment has been completed. | Implementation and Regulations (Amended 1976) |
| 7. This law will come into effect on February 2, 1975. | Commencement |
Yitzhak Rabin
Prime Minister
Shmuel Tamir
Minister of Justice
Efraim Katzir
President of the State
