Wednesday, February 19, 2014

New law gives homebuyers more leverage with builders

A new consumer protection law for the housing industry passed today in the Knesset. Contractors must publish a detailed price list of the main fixtures and specifications in apartments under construction. The law, an amendment to sale laws, states homebuyers will now be able to request changes to the specification during a period of up to six months after the end of the foundation stage. Buyers who would want to install other items or less electric points etc will receive refunds based on the contractors' price lists. Up to now, the pricing of kitchens, floors, bathroom fixtures and others worth hundreds of thousands of shekels was vague, and solely in the hands of developers and contractors as 'gifts' to lure buyers, after this law takes effect buyers can now put a price tag on those extras, sometimes made compulsory by the developer to increase profits from deals with his suppliers.

Knesset Economics Committee approved a second and third reading of the bill for more transparency by the contractors and developers and more leverage to buyers. The full list of items to be priced from electric points to kitchens will be established by the Ministry of Housing within 90 days from the approval of the law. The law will apply to all new building projects approved that have yet to start construction.

A second important amendment to the sale laws puts a cap on lawyers fees. Up to now Israeli buyers financed through transfer payments the contractors' lawyers as well as their own, up to 2% of the sale value. The new law puts a cap of 0.5% or 5000 shekel (the lower of the two) on payments for lawyers fees for transfer agreements of apartments.

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