Transactions in Israeli Real Estate from Abroad During Carona
Israeli real estate transactions from abroad during the Carona pandemic can be challenging. Government offices are closed in many places and it is difficult to get things done.
New international laws restrict the transfer of funds needed to buy and sell real estate.
How to navigate these obstructions when buying or selling Israeli real estate while living abroad (not in Israel).
After you have found the property you wish to buy or having found the purchaser for your property you need to get over some technical hurdles to bring about the signing of the contract.
Your Israeli real estate lawyer will send you a power of attorney to sign. This document will allow the attorney, or whoever you appoint, to sign the contract for you in your name.
Notarization of Documents
Israeli law requires that such a power of attorney be signed before a notary. However, no country recognizes the notary of another country. An Israeli notary is not allowed to operate outside the borders of Israel.
Therefore the power of attorney needs to be signed before the Israeli Consul who will notarize the signature.
What do you do if you do not live near an Israeli consul?
During the Carona pandemic many of the Israeli consuls were closed or were not working at full capacity and it was difficult to get an appointment with the consul even if there is a consulate in your city. Very often people were made to wait for many weeks to get an appointment. What can be done?
In the above case you can sign the power of attorney before a local notary and then his signature is confirmed in an apostille. This process is in accordance with an international treaty signed by many countries, including Israel.
Unfortunately, Canada is not signed on this treaty. So if you are living in Canada and you are unable to go to the Israeli consul, then you can go to a local notary, his signature is confirmed by the Canadian Bar and this is sent to the Israeli consul who confirms this.
The apostille process can take time. Since all over the world government offices are closed to the public or are working a low capacity due to the Carona pandemic. This means that it can take several weeks to get the documents back with the apostille seal.
It is important to be prepared for this and give yourself time to organize this paperwork. Your Israeli real estate lawyer will instruct you as to the number of copies and the way in which this needs to be done.
Anti Money Laundering Laws
Another issue that needs to be dealt with is the transfer of funds to and from Israel.
Your bank will require explanations as to why you are sending or receiving large funds. You may need to provide them with a copy of the contract, or draft contract or a letter from your Israeli real estate attorney explaining about the transaction. Your bank may require confirmation from your accountant that taxes have been paid for this money. Each country has its own set of anti money laundering laws. So does Israel.
The money can be sent to an attorney’s escrow account that is opened for this purpose and the payments will be made from this account. If you have an Israeli bank account then you can send the funds there. The Israeli banks will also require documentation as to the purpose of the trnasfer of funds and proof that taxes have been paid in Israel.
Remember to factor in conversion costs of the money. You are sending foreign currency to Israel and this needs to be converted to NIS. In addition to this, Israeli banks charge a commission for the conversion and for receiving foreign currency in to your account.
Many people choose to use the services of a company that does the exchange for you. There is no commission involved and they give you a better rate of exchange for the conversions. For large sums of money this offers a considerable savings. However, the banks do not allow the transfer of funds to and from an escrow account to an exchange company.
If you send the money through a lawyer’s escrow account the conversion needs to be done in the bank. If you send the money to the exchange company they can make the payments and transfers for you.
In preparation for your transactions speak to your bank and to your Israeli real estate attorney to find out what is needed to get started and set up the transaction.