Pinouy Binouy, in Hebrew, Demolition Reconstruction, is a real estate program supervised by the State, which for several years has allowed co-owners of old buildings to demolish them to build new ones, with tax advantages, at the expense of a developer who recovers as compensation all the additional new apartments authorized. Everyone benefits, or almost.
1. The contract with co-owners: The principle is above all that the owners of old apartments pay nothing. Therefore, when they enter into a relationship with the developer who will destroy the building and rebuild the new one, this developer also finances a lawyer for them to represent them in this contract and defend their interests. They are presented with the contract developed by this lawyer and the developer's lawyer as final and unchangeable, which is false. Remember that if the lawyer who is supposed to represent your interests is paid by the developer, there is still reason to be wary. The contract is therefore never standard and there are all kinds of clauses and possible versions to consider.
2. Legal guarantees for the project: Legally, the developer, who will destroy not only your apartment, but also your property title, is required to give you bank guarantees. A guarantee of the rent he pays you during the construction period, but especially a guarantee of the estimated value amount of the future apartment, if the project did not go through to completion. The principle is interesting, but in practice, be sure of how and when your future apartment will be valued and think about readjusting. The moment you leave the apartment must correspond with obtaining the guarantees in fact, and you also need to know if you obtain the guarantees yourself or if they are kept by the co-owners' lawyer.
3. Additional guarantees: Some contracts grant superior advantages to others. Some developers also give bank guarantees to ensure finishing work and remedying defects. You can also request guarantees to ensure property registration without delays, as well as guarantees for payment of all taxes by the developer and on time. Each guarantee encourages the developer not only to fulfill his obligations, but not to delay in order to be able to recover the bank guarantees.
4. Resale: An essential element when you enter this type of project that can easily last a decade, is to be able to be sure of reselling your apartment during the process. This type of condition is never automatically dealt with in the proposed contract because it creates obstacles both for the developer and for the co-ownership community, which the co-owners' lawyer defends. Being able to exit the project in case of problems or non-compliance with deadlines, and being able to resell one's property, are important questions to consider, not to mention their tax aspect, for which specific advice is needed.
Pinouy Binouy contracts are often negotiated over several months, sometimes several years, because they involve significant interests and risks.
Our firm specializes in real estate matters, and particularly in Pinouy Binouy contracts.
