# Your Money Before The Building Exists > Two mandatory statutes govern presale apartments in Israel. They limit upfront exposure, require indexed guarantees, and compensate late delivery. For a remote buyer, the payment voucher booklet is the difference between protected cash and exposed cash. Canonical: https://shavnu.com/blog/off-plan-protection --- **Published:** 2026-08-20 **Category:** buying **Reading time:** 11 minutes **Projects covered:** ASHIRA, RAINBOW Tel Aviv **Developers covered:** Avisror Moshe & Sons ## Two Laws You Cannot Opt Out Of Israeli presale buyers are protected by two statutes whose provisions are mandatory. They cannot be contracted away except in the buyer's favour. The Sale (Apartments) Law, 1973, governs the mandatory technical specification (mifrat), warranty and inspection periods (bedek), and compensation for late delivery. The Sale (Apartments) (Assurance of Investments of Apartment Purchasers) Law, 1974, governs what happens to your money before the building exists. Developers market Sde Dov towers years before occupancy. A buyer signing from London or New York transfers substantial sums against plans and permits, not against a finished home. These two laws are the structural answer to that timing gap. This article is written for the remote buyer who will not visit the site monthly. It prioritises payment security and delivery remedies over interior finish schedules. ## The Seven Percent Rule and Its Exposure Under the 1974 law a seller may not take more than seven percent of the price without providing lawful security. Below that threshold the rules still apply, but the practical risk concentrates above it. Some developers begin marketing before the financing structure and guarantees are fully in place. The law then permits only up to seven percent as an initial payment, and that seven percent is not guaranteed until the construction loan or lien is registered. Many developers hold the initial sum in escrow rather than depositing it, but that holding pattern is practice, not a statutory substitute for a guarantee. Before you pay anything, ask your lawyer which security is active on the date of each transfer. A reservation fee paid by wire to a marketing company without a guarantee in your name is not the same as a voucher payment under bank accompaniment. ## Bank Guarantee Versus Insurance Policy The two practically important securities are a bank guarantee (arvut bankit) and an insurance policy (polisat bituach) from an authorised insurer. Both cover the buyer's payments above the threshold, indexed to the Consumer Price Index, and remain valid until a defined release event such as registration of the apartment in the buyer's name. A bank guarantee is issued by the developer's financing bank in the buyer's own name. An insurance policy covers the same risk through an insurer instead of the construction lender. Other securities exist, including a charge, a cautionary note, and registration of rights, but the scope of protection differs materially between them. Your lawyer should read the actual instrument, not the brochure summary. The release event defines when the guarantee ends. Registration in your name is the clean exit most buyers expect. ## Indexation to the CPI Guaranteed sums index to the Consumer Price Index. If you pay ₪500,000 under guarantee and delivery slips by two years, the protected amount is not frozen in nominal shekels from the day you paid. Indexation follows the statutory and contractual formula attached to the guarantee. Indexation protects against inflation eroding the value of money held against a future apartment. It also means your liability and the developer's secured obligation move with CPI over a multi-year build. Contract indexation on the apartment price itself is a separate clause from guarantee indexation. Read both. The corpus describes guarantee indexation; individual contract price indexation is a lawyer-level review on each project. ## Bank Accompaniment and the Voucher Booklet Under a bank-accompanied project (livui bankai) the developer finances construction through a bank or large insurer. Buyer payments go into a designated project escrow account using a payment voucher booklet (pinkas shovarim). A guarantee must be issued against each payment. The bank monitor verifies construction progress before releasing funds to the developer. That monitor is not your personal adviser, but the existence of accompaniment means payments are supposed to track verified progress rather than marketing milestones alone. The repo records construction financing for projects on the field, including ASHIRA's reported financing from Mizrahi-Tefahot and First International in January 2026 for more than ₪2.5 billion. A project with bank accompaniment in place is a project where the guarantee mechanism is available at scale. > Pay through the voucher booklet with a guarantee in your name, or the money may not be protected. ## Paying Outside the System A payment made any other way, for example straight into the developer's own account without a voucher and guarantee, may leave the money unprotected. This is the single most expensive mistake a remote buyer can make. Marketing teams sometimes pressure for a "simple wire" to hold a unit. Israeli law contemplates staged security precisely because developers can fail, permits can freeze, and projects can stall. The Environment Ministry demanded a halt to infrastructure works at Sde Dov in July 2026 while contamination was handled. Buyers with unprotected deposits face a different problem from buyers with guarantees. Insist on seeing the guarantee document named to you before each tranche. Insist on a receipt tied to the voucher system where the project is bank-accompanied. ## Lien Route Versus Guarantee Route Two protection structures carry different consequences. Under the lien or caveat route, payments track construction progress closely. Funds release against verified work. Under the guarantee route, payments generally follow a contractual schedule rather than actual work done. A buyer can be paying ahead of visible progress on site. That is lawful when the guarantee is valid, but it feels uncomfortable if the crane is idle while your next voucher is due. Ask which structure your contract uses and how each instalment maps to guarantees or liens. The foreign-buyers guide mentions milestone schedules in general terms. This distinction tells you whether the schedule follows the site or follows the contract alone. ## Late Delivery: Automatic Rent Compensation The 1973 law provides automatic compensation for late delivery calculated at one hundred fifty percent of a reasonable rent for a comparable apartment, for each month of delay, beginning after a grace period of about a week and a half. The buyer must give written notice of a defect within a reasonable time of discovering it. Delay without reason can harm the claim. This remedy is statutory, not a goodwill gesture from the developer. It gives a remote buyer a defined cash consequence when keys slip beyond the contractual delivery date plus grace. Late delivery compensation is not the same as cancelling the deal. It is the buyer's running remedy while waiting. Cancellation rights depend on the contract and on material breach analysis by your lawyer. ## Release Events and Registration Guarantees end at release events defined in the instrument. Registration of the apartment in the buyer's name is the common terminal event. Until then, each payment should be covered. Do not assume the final payment at occupancy automatically means the guarantee vanished correctly on the prior tranches. Trace the chain from first deposit through last voucher. Occupancy permit (teudat ochel, תעודת אכלוס) is not the same as registration in the Land Registry. Delivery, permit, and registration can sit on different dates. The delivery-risk article walks permit stages on Sde Dov projects. ## A Remote Buyer's Checklist Before signing: confirm bank accompaniment or alternative lawful security, confirm the seven percent rule on early payments if marketing started before financing closed, and confirm guarantee indexation and release events in Hebrew with a translated summary you understand. Before each payment: receive a guarantee linked to that payment, pay through the voucher account if the project uses accompaniment, and retain bank confirmations. Never pay a "side account" because someone on email said it is faster. After signing: calendar the contractual delivery date, note the grace period, and know how to send written late-delivery notice. PFAS contamination findings in February 2026 showed that district-wide delays are possible even when your tower has a permit. Statutory rent compensation is the buyer's defined remedy while dates slip. --- Source: https://shavnu.com/blog/off-plan-protection on Shavnu, an independent English guide to the Sde Dov district in Tel Aviv. Figures come from the public record: Israel Tax Authority transaction reports, Tel Aviv GIS, tender results and the Hebrew press.