Subscribe to Print Edition | Sun., December 07, 2008 Kislev 10, 5769 | | Israel Time: 01:22 (EST+7)   Back to Homepage web haaretz.com Haaretz Toolbar Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Haaretz Magazine Business Real Estate GA 2008 Travel Week's End Anglo File

Legal Eagle / Trying to fool the bank: Not a good idea By Shay Amit When a homebuyer takes out a mortgage, several relationships cross paths. (1) The buyer and seller enter into an agreement laying out the terms of the apartment sale and what happens if the sale is canceled by either of the parties. Advertisement (2) The buyer enters into an agreement with the bank: He signs loan papers and the bank checks the value of the property changing hands, and if it approves the loan, it does so based on its findings. And then there's a third, more complex relationship between the bank, the buyer and the seller. That's because until the transaction is fully consummated, the apartment remains registered on the seller's name. For the bank to treat the dwelling as a security backing the loan, it needs the seller's cooperation even before the bank lends a shekel to the buyer. The loan may be called a "mortgage." But as long as the seller remains the registered owner, the bank doesn't register the mortgage on its own behalf. It registers a commitment with the Land Registry that a mortgage will be registered. If all goes well, then when the apartment is registered in the name of the buyer at the Land Registry, the mortgage is registered on behalf of the bank, too. A few years back, the Supreme Court handed down two verdicts regarding the bank's status when the homebuyer doesn't meet repayments, during that interim period between the note and registration of a mortgage. Yet the issue keeps coming up. The court handed down a new verdict on September 17, regarding case 4407/06, Bank Hapoalim versus Zecharia. Judge Edna Arbel described the facts as follows. An agreement for the sale of an apartment was signed in 1998. A mortgage from Bank Tefahot to the original homeowner was registered. The new buyer received a mortgage from Bank Hapoalim, which transferred the money to the seller (who had borrowed the money from Tefahot). The seller signed an undertaking to register the mortgage on behalf of Bank Hapoalim. Meanwhile, the buyer defaulted on payments to Bank Hapoalim, which sought to foreclose on the apartment. In 2004, the seller and buyer agreed to cancel the sale agreement - but Bank Hapoalim sued, demanding that the mortgage be registered on its behalf. It argued that the sale agreement had been a scam all along, by the buyer and seller, to defraud it of the mortgage loan. In a previous case (Steinmetz), the court had ruled that the bank couldn't foreclose on the apartment because it didn't have an officially registered mortgage on its behalf. It could however sue the buyer, thereby seizing the apartment and selling it. In another case (Spizeman), the sale agreement was proved to be a scam and the bank was allowed to register the mortgage for the sake of selling the apartment to regain its money. This time, the lower court adopted the Steinmetz precedent and ruled that Bank Hapoalim couldn't register the mortgage. The court ruled that the Spizeman precedent had been wrong. Hapoalim appealed to the Supreme Court. Arbel, however, found no contradiction between Steinmetz and Spizeman. A mere commitment by the seller indeed does not provide the bank with grounds to register a mortgage under normal circumstances, she ruled. But when the plaintiff has proven that the sale agreement is a figment designed to defraud the bank, Spizeman applied. The bank had lent money in good faith, relying on the presentation by the seller and buyer; and was therefore entitled to register the mortgage, lay its hands on the property, sell it and regain its money. The author is a partner at Shlomo Tessone law offices. Bookmark to del.icio.us   Violence on film Two settlers filmed shooting at Palestinians turn themselves in to police. Warning to Iran Bush: United States will not allow Iran to develop a nuclear weapon.

Read & React Avi Issacharoff: Hebron settler riots were out and out pogroms Responses: 232 Obama's 'Palestinian friend' laments catastrophic U.S. policy in Mideast Responses: 242 Israel braces for settler violence in wake of Hebron house evacuation Responses: 188 IDF soldier assaults Haaretz photographer in Hebron Responses: 115 More Headlines 21:24 VIDEO: Settlers filmed shooting at Palestinians turn themselves in 00:59 Clinton to Olmert: I will work for Middle East peace 23:36 Qassam fired from Gaza hits Ashkelon; IAF strikes rocket launcher 22:33 Israeli soldier allegedly assaults Haaretz photographer in Hebron 22:35 Egyptian paper urges top cleric to purify his hand after Peres handshake 21:49 Abbas slams Hamas for depriving thousands of Palestinians of haj pilgrimage 17:42 Infrastructure Min.: Demanding Olmert's resignation was a mistake 10:58 Report: IAEA chief says efforts to curb Iran nuke program 'a failure' 22:44 PA police: Settlers set fire to Palestinian home in Hebron 22:44 Islamic Jihad prods Palestinian factions to avenge Hebron settler riots 19:33 40 leftists arrested as they try to block Berlin neo-Nazi march 07:26 Bush: America will not allow Iran to develop a nuclear weapon 14:55 Israel eases travel restrictions at key West Bank checkpoint Previous Editions Select Day 05 dec 04 dec 03 dec 02 dec 01 dec 30 nov 28 nov 27 nov 26 nov 25 nov 24 nov 23 nov

Special Offers Advertisement Summer in Israel Israeli style - Tzofim Chetz V'Keshet 2009 Living in Israel Studying in English Click & Meet our students from all around the world Fattal Hotel Chain Perfectly located hotels on best resorts of Israel. Car rental in Israel Shlomo Sixt Receive $15.00 from our low rates. Eldan Rent a Car Israel's leading car rental company offers you a 20% discount on all online reservations Jewish Singles Personal Ads Find the love of your life on JDate.com Israel's Premier Real Estate Website www. israel-property.com Hebrew Summer courses From $39.95 Junkyard Junk a car - get free towing nationwide and a tax-deductible receipt

Home | TV | Print Edition | Diplomacy | Opinion | Arts & Leisure | Sports | Jewish World | Underground | Site rules |

Real Estate in Israel | Travel to Israel with Haaretz | Hotels Israel | Restaurants Israel | Tourist attractions Israel | Shops Israel

birthright Israel | Search engine marketing

Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.

© Copyright  Haaretz. All rights reserved