Before buying or selling commercial property in Israel, it is critical to understand the process and the legal factors that can impact the transaction. International buyers or those abroad who wish to sell property in Israel that they have inherited must take particular care to comply with the requirements unique to the Israeli real estate market.

Maximizing Your Benefits in a Commercial Real Estate Transaction

Buying or selling commercial real estate in Israel involves several steps. To protect your interests and achieve your best objectives from the process, it is wise to start by hiring a professional with experience in the commercial market and a good understanding of local laws and regulations. Your real estate professional can help you with the following steps as you do your due diligence. Before making an offer, it’s essential to carefully review the property’s legal and financial status, including the terms of any leases and any outstanding debts or liabilities.

Once you understand the property well, you can begin negotiating the sale terms with the seller or their agent. Then, you start the multi-step process of closing the deal, including signing contracts and transferring property ownership. This usually involves paying various fees and taxes and registering the sale with the proper authorities.

It’s essential to be familiar with the local real estate market and any applicable laws and regulations governing commercial property transactions in Israel. An attorney specializing in real estate law can assist you in navigating this process.

Legal and Probate Factors Involved in Buying or Selling Commercial Real Estate in Israel

When buying or selling commercial real estate in Israel, it’s essential to consider the various legal and probate issues that may arise. Some of these include:

1. Title and ownership: One of the most critical steps in any real estate transaction is to verify that the seller is the rightful owner of the property and that there are no outstanding claims or liens on the title.
2. Zoning and Building Regulations: Before purchasing a property, it’s essential to verify that it complies with all local zoning and building regulations, as well as any applicable environmental laws.
3. Contracts and Agreements: When buying or selling a property, it’s essential to have a detailed and legally binding contract that outlines the terms of the transaction and any warranties or guarantees.
4. Probate Issues: If a deceased person owns the property, it may be subject to probate, which is the process of transferring ownership to the rightful heirs. This can be a complex and time-consuming process, and it’s essential to have the assistance of a lawyer familiar with probate law in Israel.
5. Taxes: Both buyers and sellers must be aware of any taxes that may be due on the sale of commercial real estate in Israel, including transfer taxes, capital gains taxes, and value-added taxes.

Overall, it’s essential to seek the assistance of a qualified Israeli real estate attorney when buying or selling commercial real estate in Israel to ensure that the transaction is completed smoothly and in accordance with all applicable laws and regulations.

Work with an Experienced Commercial Israeli Real Estate Lawyer

At Aharoni Law Firm, we specialize in assisting international buyers and sellers who seek to acquire or divest interests in Israel. We understand the complications that can arise, so we can plan to prevent problems.

We can manage all aspects of the transaction, allowing you to successfully conclude business remotely. Call us at 888-923-0022 or schedule a consultation online.

FAQs on Selling or Buying Commercial Real Estate in Israel as a Foreigner

Can a non-resident purchase commercial real estate in Israel?

Yes. Non-residents (foreign individuals or entities) can buy commercial property in Israel. There are special legal, tax, zoning, and registration issues to consider —

What due diligence should I request when buying commercial property?

1. Title and encumbrances (liens, mortgages, restrictions);
2. Lease agreements (if the property is leased), their terms, and tenant stability;
3. Zoning/building permits and any potential illegal construction issues;
4. Outstanding municipal or utility debts.

What are the main legal steps when buying commercial property in Israel?

• Verifying title and ownership (ensuring no liens or encumbrances);
• Checking zoning, permitted use, building regulations, and environmental compliance;
• Negotiating and drafting the purchase contract;
• Completing the transfer: paying taxes/fees, registering the ownership at the Land Registry (Tabu).

How does probate or inheritance law affect commercial real estate transactions in Israel?

If the property is inherited or the owner has passed away, it may still be subject to probate or transfer of rights under Israeli succession laws. This often complicates transactions, especially for sellers abroad.

What taxes must I consider when buying or selling commercial real estate in Israel?

• For buyers: transfer tax, VAT (where applicable), other closing fees;
• For sellers: capital gains tax, possible real estate tax, VAT if relevant.

Can I manage the purchase or sale entirely from abroad?

Yes, you can manage the purchase or sale of commercial property in Israel entirely from abroad. With the right legal partner, such as an Israeli attorney, you can utilize the Power of Attorney, remote signings, and digital communications to act on your behalf in every significant step of the transaction.

What should I watch for in a commercial property contract in Israel?

When reviewing a commercial property contract in Israel, it’s essential to have a local attorney ensure it aligns with Israeli law and your interests. The contract should clearly state the parties’ identities, property details, transaction inclusions, price, payment terms, closing date, adjustments, seller’s warranties, contingencies, and consequences of breach.

How long does the transaction process typically take in Israel?

It varies depending on complexity (title issues, probate, lease reviews, foreign buyer status). Many straightforward deals can be closed within a few weeks once the documents are clean, but those requiring probate or complex due diligence can take several months. Your attorney will provide a customized timeline tailored to your specific case.

How do I find a trustworthy Israeli attorney for full A-to-Z support?

Look for an Israeli attorney who:

• Specializes in Israeli real estate law (commercial property);
• Has experience with international/remote clients;
• Can coordinate all steps (legal, tax, title, registration);
• Communicates in your preferred language and with clear process explanations;
• Ask for client references.

What documentation will I need as a foreign buyer or seller?

Documentation includes: a passport/ID, proof of address, corporate documents if purchasing via an entity, previous ownership documents or inheritance certificates (for sellers), and a power of attorney (if acting remotely). Your Israeli attorney will provide a precise list tailored to your specific situation.

Are there restrictions on foreign entities owning commercial real estate in Israel?

Israeli law allows foreign individuals and entities to purchase real estate. However, there might be additional regulatory, tax, or reporting obligations, depending on the type of property and use.

How do lease agreements work when buying a commercial property in Israel?

If the property is already leased, you’ll want to review the lease terms, including duration, tenant creditworthiness, rent levels, obligations for repairs/maintenance, and termination rights. These impact the property’s value and risk.

What happens if there is unauthorized construction on the property?

Unauthorized construction (or building without proper permits) can result in significant legal and financial risks, including fines, the requirement to demolish, difficulty obtaining a mortgage, or transferring title. An Israeli real estate attorney will check building permit status and advise on risk mitigation (or negotiate warranties/indemnities from the seller).

How do we handle currency exchange and repatriation of funds?

Buying or selling from abroad often involves exchange rate risk and international fund transfers. Your attorney can coordinate with Israeli banks or foreign exchange specialists, advise on blocked-funds laws (if relevant), and work with your tax/tax-advisor team to plan for repatriation of funds.

What are the ongoing obligations after purchase (for example, property management, tax filings, etc.)?

As owner, you may be responsible for: property taxes, municipal payments, building maintenance, lease management (if applicable), and annual income/tax reporting (if generating rent).

If I form an Israeli (or foreign) entity to purchase the property, what should I be aware of?

Purchasing via a corporation (Israeli or foreign) can offer benefits (liability, tax planning). However, you must also consider the corporate structure, Israeli reporting obligations, tax residency issues, and how your home country treats the entity or its income. A law firm experienced in cross-border deals will guide the structure and legal compliance.

What happens if I decide to sell later — how do I maximise my benefit?

Hiring a seasoned Israeli attorney helps you plan by ensuring your purchase contract allows for transfer, maintaining proper accounts, tracking improvements/capital expenditures (which can be helpful for capital gains tax purposes), and staying compliant with regulations. When selling, the attorney will handle due diligence, documentation, and help ensure full value is realised.

Our experienced Israeli attorney at our firm is well-equipped to handle all the above from start to finish. Please contact us today for a complimentary consultation, and we can begin remote due diligence and protect your interests.