Purchase Contract and Deposit in Israel: The 7% New-Build Cap, Not a Guessed 10%

A Tel Aviv sale contract (heskem mekhira) is a Sale Law sale of land. The statute sets no second-hand deposit percent. A builder-seller may not take more than 7 percent of the price unless the 1974 law’s listed security is given. The official 2026 Tabu warning-note fee is ₪188. There is no escrow industry.

What the Sale Law actually is

sale contract (the formal purchase agreement) (הסכם מכר) is the market English for the paper that follows a zichron devarim and the due-diligence file. The Sale Law, 5728-1968 (Sefer HaChukim 5728, 98) s.1 is one sentence: a sale (transfer of an asset for a price) (מכר) is the transfer of an asset for a price. Section 4 then applies that law to movables and, with the necessary changes, to a sale of land and of rights — unless another law has special provisions, or the parties’ agreement implies a different intention. Section 6 adds good faith in performance and in the use of a right. This page is that land sale, not a furniture invoice.

Three default duties then sit on the parties. Section 7 makes the seller delivery (placing the sold asset at the buyer's disposal) (מסירה) and transfer of ownership (העברת בעלות). Delivery is placing the asset at the buyer’s disposal (s.8). Section 19 makes the buyer pay the price and accept the asset. Section 21 pays that price at the time of delivery. Section 23 makes delivery and payment concurrent. A staged Israeli apartment schedule is the parties displacing those defaults. The statute does not write a 10% or 15% first instalment.

When you hold the keys, and when you own the flat

Sale Law s.33 passes ownership on delivery unless the parties agreed another time or method. Land is that other method. The Land Law, 5729-1969 (Sefer HaChukim 5729, 259) s.7 still completes a land transaction only by registration in the Tabu. Until then the signed contract is an undertaking to do a transaction. Keys are possession under s.8. Title is the registrar’s entry. English pages that treat handover as the sale collapsing those two steps. We will not. The dedicated handover page is that split, including the 1973 builder-seller late-delivery ladder.

The lock in the gap is the warning note / caution on the land register (הערת אזהרה). Land Law s.126 records a written undertaking to do a transaction, or to refrain from one, on the application of either party. Section 127 is the bite: until the note is deleted, a conflicting later transaction shall not be registered except with the entitled person’s consent or by court order. The official 2026 registrar cell to file that note is ₪188 ($51 / €47 / £40; item 13(a)(1)). Deleting one is ₪127 (item 13(b)). That is a Justice-Ministry tariff, not a lawyer’s drafting bill. A warning note is not ownership.

The 7% new-build ceiling, and who it does not cover

The Sale of Apartments (Assurance of Investments of Persons Acquiring Apartments) Law, 5735-1974 (Sefer HaChukim 5735, 14) is the other special law s.4 makes room for. Section 1 defines the seller as defined in the 1974 law — a person who sells a flat they built or will build (or bought from that builder to resell) (מוכר): a person who sells a flat they built or will build, or who bought that flat from such a builder in order to resell it. A private owner who did not build the flat and received no consideration in that trade is carved out. The 1973 Sale of Apartments Law defect clocks use the same seller shape. Do not read a second-hand Florentin listing as that seller.

Section 2 is the money rule English pages compress into “the deposit is protected.” A seller shall not receive from a buyer, on account of the price, a sum exceeding 7 percent unless the seller has done one of the listed acts — despite anything in the sale contract. The first listed act is a bank guarantee (ערבות בנקאית) for the return of every shekel the buyer paid, except the VAT component (see VAT on a new-build), if the seller cannot transfer the agreed right because of an attachment, a stay, a winding-up or receiver, or an absolute bar to delivering possession. Cancelling the contract by itself is not that bar. The other listed acts are an approved insurer’s policy naming the buyer; a first mortgage of the flat or a relative share of the land; a Land Law s.126 warning note with no prior charge ranking ahead of it; or transferring the agreed right, clean of charges. Section 2א1 adds a written notice, at signing, of that right and of those routes.

What 7% of our tracked median actually is

The citywide median asking price in July 2026 is ₪4,850,000 ($1,310,811 / €1,212,500 / £1,021,053; n = 1,037 tracked active listings). 7% of that median is ₪339,500 ($91,757 / €84,875 / £71,474). That is the 1974 law’s unsecured-payment ceiling on a builder-seller file the size of our median asking flat. It is not a typical second-hand deposit. It is not a finding that your contract will ask for 7%. Our implied median tracked apartment is 88 sqm (950 sqft) — median asking divided by apartment-scale ₪54,945/sqm ($14,850 / €13,736 / £11,567 per sqm; n = 987). That size is a ratio of two medians. It is not the specification a builder-seller must attach.

A non-resident mortgage uses a 50% loan-to-value cap. On that median asking price the loan is ₪2,425,000 ($655,405) and the cash down is ₪2,425,000 ($655,405) if a later appraisal meets the contract. Non-resident purchase tax at 8% from the first shekel on ₪4,850,000 (under the ₪6,055,070 band) is ₪388,000 ($104,865). That tax is a different statute from the 1974 7% cell. Do not add them into one “deposit.” Funds still move through the trust-account route. Citywide days from first publication to detected removal is a median 33 days (p25 16, p75 42; n = 94 dated removed listings, 59.1% dated coverage). That is time-on-listing until our tracker saw the row disappear, not a verified time-to-sign.

What we still will not invent

Four things we will not put a number to. A typical second-hand deposit percent: Sale Law ss.21 and 23 default to pay-on-delivery; they do not write 10% or 15%. Our panel has no contract-deposit field. That the 7% cell applies to a private resale: s.1 is a builder-seller definition. The minister’s staged-payment table under s.3: those regulations exist; this file does not republish them. An escrow or title-insurance premium: Israel has no such industry as standard. The lawyer’s trust account and the warning note are the substitutes. Drafting that contract for another person is a reserved act — see do I need an Israeli lawyer. A remote buyer still signs this paper under a power of attorney. Ask counsel which first instalment your contract names, the same way you ask which Tabu or leasehold right you are actually buying.

Frequently asked questions

Where this fits

The sale contract sits on the buying-process track after zichron devarim and due diligence, next to the lawyer’s drafting work and VAT on a new-build and new-build vs second-hand and before Tabu registration. Funds still move through the trust-account route. Eligibility is can foreigners buy. The Hebrew terms are in the glossary, the cluster map is the foreign-buyer guide, and live asking figures sit on Tel Aviv property prices. Return to the buying-guide hub.