Real Estate Transactions
Deals in residential real estate
While an average person’s assets include movable assets and non-housing assets, there are also significant real estate holdings involved in individual and family wealth, mainly different rights in the various types of real estate: apartments, land, etc. Usually, real estate transactions are the largest economic transactions of a typical individual and are of great significance, whether purchasing an apartment for investment purposes, or a commercial property intended for commercial use or rental income, or a plot of undeveloped land for construction or other purposes.
Apartment Purchases
The importance of buying a residential apartment forces a potential buyer to first examine the interests and purposes of the purchase. The law does not apply in the same way to the purchase of an apartment for housing as it does to a purchase of a residential property for investment. When a person comes to buy a residential apartment, he or she will first examine the location of the residence, proximity to workplaces, family, places of education, etc., and tax treatment can differ for a residence. On the other hand, a person who comes to purchase an apartment for investment will focus more on economic issues, including potential for appreciation, and more.
After examining the interests as detailed above, each party will examine the feasibility of the transaction in accordance with his or her economic resources, together with various data that vary from person to person, such as the taxes that will apply to the transaction, financing expenses, etc.
Legal aspects of the transaction are key to a successful deal. It is important to be accompanied by competent legal representation from the initial stage of the transaction of interest in property and negotiation of the deal. A real estate attorney will assist in uncovering the full relevant information about the property, navigating the bureaucratic aspects necessary for realizing the transaction, understanding the taxation applicable to the transaction on either side, and counseling and professional guidance that may have a direct impact on the profitability of the transaction.
Complex Real Estate Transactions
Many landowners are debating what kind of real estate deal is worth entering into for the land they own, in order to ensure maximum profit. In order to make the right decision, various considerations must be taken into account, including the following: considerations of tax consequences, financing, timing for the deal to be consummated, the nature of the land, location, involving a third party in the transaction, and more.
Before making a decision, it is important to understand clearly the different types of transactions, in particular the advantages and disadvantages of each type of transaction, and to consult with a lawyer and tax expert in real estate.
The following is a brief summary of common structures for real estate land deals:
A cash deal is a transaction in which the landowner sells the land he or she owns for monetary consideration. The consideration is received by the owner of the land within a short period of time, and the transaction is considered a clean deal without relative risks, because the landowner receives full remuneration immediately. The terms of the transaction are clear and known and are not exposed to failures and problems during the realization of construction on the ground. However, in addition to the many advantages, there is also a disadvantage: The owner of the land does not share the potential upside of the developer’s profit inherent in the units that will be built on the land.
A combination deal is a transaction in which the landowner sells some of his or her rights to the land to the contractor and in return receives construction services on the part of the land that remains under his or her ownership.
A conversion deal is a transaction in which the owner’s full rights are sold in the land for receipt of cash consideration or receipt of some of the apartments that will be built on the land.
The commissioning of construction services is a deal in which the landowners communicate with a contractor but essentially carry out the construction of the project themselves. This deal requires knowledge and understanding in real estate and can be relatively demanding in terms of required financial resources for the purpose of construction.
It is important to emphasize both that each case should be examined on a case-by-case basis and that the appropriate deal be adapted to the specific case. The considerations that are examined are many and varied, and there is not always one correct choice of deal types, but rather the need for more complex and nuanced economic decisions. For example, the various aspects of taxation, including land appreciation tax, appreciation levies, VAT, etc., as well as other economic and non-economic considerations, should be examined carefully.
Real Estate Transactions – What is the Attorney’s Role?
Real estate contracts are inherently complex. It is necessary to formulate professionally the details of the contract between the relevant parties for each transaction, including among other things: setting conditions for the validity of the agreement and a mechanism that will monitor any deviation from its terms, ensure appropriate financial guarantees on the part of the contractor, and to ensure a series of protections against various potential negative scenarios that may occur during the transaction, etc.
A professional lawyer will accompany the parties in any type of real estate transaction from the negotiation stage through to the conclusion of the transaction. Our firm has accumulated considerable experience in the field of real estate transactions, and we will endeavor to execute any real estate transaction to the full satisfaction of our clients.
