Buying Off-Plan: How Your Money Is Protected
The Sales Law guarantee and its alternatives, the accompanying bank and the voucher book, the 2022 limit on index linkage, compensation for late delivery, and what to check in a Sde Dov contract.
The short answer
When you buy an apartment off-plan (דירה על הנייר, dira al ha-neyar) in Israel, the developer may not take more than 7 percent of the price from you unless it has secured your money in one of five ways set by the Sale (Apartments) (Assurance of Investments of Purchasers of Apartments) Law 1974. In practice that almost always means a bank guarantee issued for each payment you make through a voucher book.
Two further protections come from the Sale (Apartments) Law 1973, as amended in 2022. For contracts signed from 7 July 2022, no more than 40 percent of the price can be linked to an index, and a late delivery earns you fixed monthly compensation without proof of loss. A contract can improve on these rules for the buyer but cannot take them away.
This page is general information, not legal advice. Your own lawyer checks how these protections are written into the contract you are offered.
The five securities, and what each one covers
Section 2 of the 1974 law lists five ways a seller can secure payments above 7 percent. A bank guarantee (ערבות בנקאית, arvut bankait) or an insurance policy must secure the return of everything you paid if the seller cannot transfer the apartment to you because of an attachment, a stay of proceedings, a liquidation or receivership order, or circumstances that make delivery absolutely impossible. Cancelling the contract is not by itself such an event, so a guarantee does not pay out because you changed your mind or used an exit clause.
Since the 2022 amendment the guarantee and the insurance policy do not cover the VAT part of your payments. If the security is called, a fund held by the Accountant General at the Finance Ministry repays the VAT through the bank or the insurer.
| Security | What it is | What to check |
|---|---|---|
| Bank guarantee (the arvut chok mecher, Sales Law guarantee) | Issued by the accompanying bank for each payment made through the voucher book | That every payment above 7% has a guarantee in your name, issued within 14 business days |
| Insurance policy | A policy from an insurer approved by the Capital Market Commissioner, with you as beneficiary and the premium paid in advance | The insurer, the policy number, and that it covers each payment |
| First-ranking mortgage | The apartment, or its share of the land, mortgaged in your favour or to an approved trustee company | That it is first-ranking and registered |
| Caution note (הערת אזהרה, he'arat azhara) | A caution registered in your favour under section 126 of the Land Law | That no mortgage, attachment or third-party right ranks ahead of it |
| Transfer of ownership | Ownership or another right in the apartment registered in your name | That it is free of any charge |
The accompanying bank and the voucher book
Large new projects are usually financed under bank accompaniment (ליווי בנקאי, livui banka'i): the bank finances construction and controls a project account into which buyers' money goes. Section 3B of the 1974 law requires the accompanying bank to issue a voucher book (פנקס שוברים, pinkas shovarim) for each apartment. You pay only through those vouchers, and each voucher payment is an irrevocable instruction to the bank to give you a guarantee or policy, which it must do within 14 business days.
Two rules follow. Do not pay the developer by transfer to any other account, by cheque or in cash, even for an upgrade, until your lawyer confirms how that payment is secured. And if you take a mortgage, section 3C requires the lending bank to tell you in writing about these protections and to make sure the security is in place before it releases each draw.
In Sde Dov, published examples of this financing include about ₪700M from Discount and Hapoalim for Luzon Ronson's lot 2227 (June 2025). Ask which bank accompanies your project and get its name on the contract.
Index linkage after the 2022 change
Until July 2022 contracts commonly linked the whole unpaid price to the construction inputs index (מדד תשומות הבנייה, madad tsumot ha-bniya). Amendment 9 to the Sale (Apartments) Law changed that for contracts signed from 7 July 2022, and it is still the rule in September 2026. The index allowed is the construction inputs index for residential building published by the Central Bureau of Statistics.
On a ₪6.8M contract at most ₪2.72M can be linked, so every 1 percent rise in the index adds at most ₪27,200. Under the old practice, the whole ₪5.44M left after a 20 percent down payment could have been linked, twice as much.
| Rule | What it means |
|---|---|
| Only the construction inputs index | No linkage to the consumer price index or any other index |
| First 20% of the price | Not linked at all |
| Every later payment | At most half of it linked |
| Overall ceiling | At most 40% of the price exposed to the index |
| End date | No linkage after the delivery date in the contract, unless you paid late or the contract was frustrated |
| Interest | None, except late-payment interest if you pay more than seven days late |
| Contracts signed before 7 July 2022 | The old contract terms still apply |
The payment schedule
The law does not fix a schedule; the contract does, within the 7 percent rule and the security requirement. Schedules at Sde Dov range from staged payments tied to the building permit and construction milestones to campaigns that defer most of the price to delivery. Calcalist reported in December 2025 that FIRST offered two tracks in one contract: the full list price with easier terms, or a lower price for accelerated payments, with ₪50,000 at the purchase request, 7 percent at contract, a top-up to 35 percent when the building permit is issued, 12.5 percent two years later, 12.5 percent two years after that and the balance six months before Tofes 4 (occupancy approval).
Deferral has a cost that is not always visible. Bizportal reported in June 2026 that developers' financing offers in the district are worth a hidden 6 to 8 percent off the listed price. Since March 2025 the Bank of Israel has limited bullet and balloon loans on which the developer pays the interest to 10 percent of each bank's quarterly mortgage lending, under a temporary order in force until 31 December 2026. Purchase tax is paid on the price in the contract whichever track you choose.
| Question | Why it matters |
|---|---|
| How much is paid at signing and at the permit? | Cash you need before the bank lends against a finished apartment |
| How much is linked, from which base index? | Up to 40% of the price can rise with the index until the contractual delivery date |
| How much is due at delivery? | The balance a mortgage usually has to cover |
| What does the price difference between tracks buy? | A lower price for faster payment is a financing trade, and so is a higher price for deferral |
| What triggers each instalment? | A permit, a construction stage or a calendar date shifts differently if works stop |
Late delivery: the compensation formula
For contracts signed from 7 July 2022, if the developer delivers more than a month late you are owed compensation without having to prove any loss. It is based on the rent of an apartment similar in size and location and is paid at the end of each month. The developer owes nothing only if you caused the delay or the contract was frustrated by extreme circumstances that could not have been foreseen, and the contract may not reduce the amounts. The wartime law that let parties postpone contractual obligations covered obligations falling due between 7 October and 31 December 2023.
As a worked example, for every ₪10,000 of monthly rent on a similar apartment, a twelve-month delay is worth ₪135,000: nothing for the first month, ₪30,000 for months two to four, ₪75,000 for months five to ten and ₪30,000 for months eleven and twelve. Linkage also stops at the contractual delivery date, so a late developer cannot keep indexing your unpaid balance.
| Month of delay | Compensation for that month |
|---|---|
| 1 | None |
| 2 to 4 | 100% of the rent of a similar apartment |
| 5 to 10 | 125% of that rent |
| 11 onward | 150% of that rent |
What to check in a Sde Dov contract
Sde Dov adds three risks to the usual list: plot-level PFAS findings, delivery dates from 2029 onward in a district where works have already been halted once, and, on private Big Bloc land, an allocation among owners that the court has frozen. The checklist puts those next to the general points. For the contamination questions in full, see the contamination guide.
| Check | Why it matters here |
|---|---|
| Security for every payment above 7% | Name the accompanying bank, get the voucher book, and confirm each guarantee arrives within 14 business days |
| Guarantee and VAT | The guarantee excludes VAT; the state fund repays that part separately |
| Linkage clause | Construction inputs index only; first 20% unlinked; at most half of each later payment; stops at the contractual delivery date |
| Delivery date and extensions | First occupancy is expected in 2029; count the grace periods the developer has written in |
| Frustration and force majeure | The statutory exemption is narrow; check whether the contract tries to treat a soil or environmental order as frustration |
| PFAS | Is the plot one of the nine named in July 2026? Ask for the approved investigation report and who pays for remediation |
| Exit clause | A contamination-linked right to cancel, with refund, linkage and deadline; the guarantee does not pay on cancellation alone |
| Building permit condition | Whether you can cancel if the permit is not issued by a stated date |
| Developer's legal fee | The statutory cap (the lower of ₪5,915 or 0.5% of the price, plus VAT) does not apply above ₪4,642,750 |
| Specification and extras | The technical specification must be attached; price parking, storage and upgrades in writing |
| Assignment before delivery | Whether you may sell your contract, and the developer's fee for consenting |
| Registration timetable | Condominium within a year of the later of parcel registration or handover; your rights within six months after |
Where each of these comes from
Sale (Apartments) (Assurance of Investments) Law 1974 on Nevo: section 2 (7 percent and the five securities), section 3B (accompanying bank, voucher book, 14 business days), section 3C (lending bank), section 3C1 (VAT): https://www.nevo.co.il/law_html/law00/70330.htm (checked 28 September 2026)
H. Noam law office, summary of section 2: what a guarantee covers, the insurer's approval, the VAT fund since 2022: https://noamadv.co.il/aravut-hok-hamecher-perek-2 (checked 28 September 2026)
Ministry of Construction and Housing, Amendment 9: linkage limits and delay compensation: https://www.gov.il/he/pages/9th-amendment (5 July 2022)
Knesset, Sale (Apartments) Law (Amendment 9) 2022: summary of the enacted law: https://main.knesset.gov.il/Activity/Legislation/Laws/pages/lawbill.aspx?t=lawsuggestionssearch&lawitemid=2193012 (2022)
Sale (Apartments) Law 1973 on Nevo: sections 5A, 5C and 6B: https://www.nevo.co.il/law_html/law00/72490.htm (checked 28 September 2026)
Sale (Apartments) Law 1973 on Wikisource: section 5C(d), definition of the construction inputs index: https://he.wikisource.org/wiki/%D7%97%D7%95%D7%A7_%D7%94%D7%9E%D7%9B%D7%A8_(%D7%93%D7%99%D7%A8%D7%95%D7%AA) (checked 28 September 2026)
Rashut HaRabim journal, wartime postponement law covering obligations due 7 October to 31 December 2023: https://journal.lawforum.org.il/sapir-reuveni (26 November 2024)
Sale (Apartments) (Limit on Legal Expenses) Regulations on Nevo: ₪5,915 or 0.5 percent, not above ₪4,642,750: https://www.nevo.co.il/law_html/law00/135722.htm (version current at 1 February 2026)
Ynet (Calcalist), FIRST's two payment tracks and the accelerated schedule: https://www.ynet.co.il/economy/article/r1auftaq11l (28 December 2025)
Bizportal, hidden financing discounts of 6 to 8 percent at Sde Dov: https://www.bizportal.co.il/realestates/news/article/20033505 (6 June 2026)
Bank of Israel press release, limits on deferred-payment sales and bullet and balloon loans: https://www.boi.org.il/publications/pressreleases/23-3-25 (23 March 2025)
Bank of Israel, Directive 329, version 13: the 10 percent limit in section 8A until 31 December 2026: https://www.boi.org.il/media/hjrlkrse/h2852.pdf (30 June 2026)
Nadlan Center, Discount and Hapoalim to lend Luzon Ronson about ₪700M for Sde Dov: https://www.nadlancenter.co.il/article/12329 (24 June 2025)
Globes, the nine plots with PFAS indications: https://www.globes.co.il/news/article.aspx?did=1001550365 (23 July 2026)
Globes, buyers adding contamination cancellation clauses: https://www.globes.co.il/news/article.aspx?did=1001550723 (28 July 2026)
Globes, seven projects marketing and first occupancy expected in 2029: https://www.globes.co.il/news/article.aspx?did=1001554092 (2 September 2026)
Mako, Finance Ministry data on cancellations in Tel Aviv under building-permit conditions: https://www.mako.co.il/finances-real-estate/Article-18016c85d4760a1027.htm (3 September 2026)
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