Israeli Real Estate Memorandum of Understanding

What is a Memorandum of Understanding?

A real estate memorandum of understanding (as opposed to a memorandum of understanding in corporate contracts) is a legally binding document that states, the buyer intends to buy the property for a certain cost or under particular conditions. Any memorandum of understanding (“Zichron dvarim”) regarding a real estate transaction needs to be reported to the Israeli Tax Authority. Registration for real estate goes through the Israeli Land Registration department. This department is under the Israeli Ministry of Justice.

A Lawyers Suggestion when Signing a Memorandum of Understanding

In any legal transaction related to real estate, both the seller and the buyer have particular rights and responsibilities. It is important to retain legal assistance, for the buyer and the seller separately, to ensure that the lawyer is working in your particular interests and that all the proper regulations and specifications are followed.

It is important to note that Memorandums of Understanding often do not include important details about the real estate transaction, which buyers do not often anticipate. Lawyers generally advise their clients not to sign a memorandum of understanding with a seller or broker, as all conditions and terms should be set with a lawyer in order to avoid legal problems in the future.

However, signing an MOU can help ensure that that you have first refusal right on the property, or even the the seller registers a warning mark on your behalf. Having a lawyer review all aspects of the MOU will ensure you, as the buyer, knows what they are signing.