After seeing what seems like an endless amount of houses, you finally find the house of your dreams. From the face of it, you know you want it and you are seriously thinking of purchasing it. But for a number of reasons the formality of signing an actual contract needs to be delayed for a few days. The seller is pressuring you into making some sort of commitment and the real estate agent tells you that there are at least two more couples that are interested in the same house.  You are being pressed into a corner between a rock and a hard place and you are worried that the seller will sell "your" house to someone else.

According to Israeli law, both sides (the seller and the buyer), are not bound to a sale until some sort of formal documentation is signed and exchanged between them. It was for this very reason that the pre-contract document, i.e. a "Zichron Dvarim" was invented many years ago, in order to show seriousness from both sides so that they cannot back out on the deal. The Zichron Devarim was a short document, normally no longer then one page, summarizing the essential terms of the agreement and signed by both sides. It was the foundation for the contract that would be signed at a later date.

Sounds like a good idea right? WRONG!!

Let me state only a few scenarios that can happen after signing on such a document that can cause you some serious problems:

1. The Zichron Devarim is a binding contract even if you did not yet check the seller's rights on the house, or better yet when you discover a problem with the title of the property.
2. You will have a problem trying to back out of it in the case where your engineer discovers a major defect in the property after the signing of this document. The seller will most likely claim that you are bound by your signature on it.
3. A Zichron Devarim is signed and then the seller receives a much higher offer on his house or he feels that the buyer is unnecessarily dragging the deal and he wants to back out of the sale. The seller is now stuck with a legal document binding him to this buyer whether he likes it or not.
4. Signing on a Zichron Devarim may prevent any further negotiations on important factors of the sale such as the main features of the house, the seller's legal responsibilities or the possibility of canceling the deal in case of defaults.
5. The Zichron Devarim may be considered a final contract for tax purposes. The time limit for filing the property tax forms starts to tick even though the final contract has not yet been signed.

Legal problems as mentioned above often ended up in court where the judges had to decide whether or not both parties intended to be bound by the Zichron Devarim and whether the details included in it were specific enough to convince the court that there was an actual agreement ("meeting of the רצונות") to complete the deal. If the court was not convinced of the above then they did not enforce the document. Needless to say, these documents were continually criticized by the courts and the problems continued to arise since the wording of the Zichron Devarim, (which as mentioned above, is usually a very short document) was often ambiguous.

Therefore it is best advised not to sign on a Zichron Devarim, but to notify your lawyer that you are seriously looking into buying the house. Then give him/ her the time needed to conduct a proper and thorough due diligence and work on a full sale contract for what will most probably be one of the most expensive purchases you will ever make. In this day and age when most of the checkups can be done by fax and/or email, the contract for the real estate purchase can be prepared fairly quickly, precluding the need for a Zichron Devarim in the first place. If you for some reason do find yourself pushed into signing one, I strongly advise you to do so with great caution and have a lawyer review it first.

The only place a dispute concerning a Zichron Devarim can be resolved is in court and believe me that is the last place you want to be, even at the risk of losing your dream house.

Mirit Reif is an attorney in the Bet Shemesh branch of Hacohen Wolf Law Offices. She can be reached at 02-9999235. Hacohen Wolf is a law firm specializing in Real Estate, Taxation and Commercial Law with offices in Jerusalem, Beit Shemesh, Tel-Aviv and New York.