Realtors in Israel are subject to the Real Estate Agents Law. The Law has a dual purpose: to protect consumers and clearly define their contractual relations with their Realtors, and to protect licensed Realtors from negligent imposters, through fines and jail sentences. The Law determines that Realtors are required to be licensed in order to operate, and consumers should verify that anyone presenting themselves as a Realtor is in fact licensed to operate as such. This can be done through the Ministry of Justice website at the Registrar of Realtors: http://www.justice.gov.il/MOJHeb/RashamHametavchim.

 

The Real Estate Agents Law requires that a person seeking to be licensed as a realtor is neither:
 -Insolvent or - Convicted of a crime of moral turpitude

Buying or selling a house is not an everyday event for most consumers, therefore it should be placed with a Realtor who can be trusted, who will carry out his function with the clients’ best interests in mind and with competence. A Realtor must provide all of the information that he has regarding essential matters pertaining to the property in question, as per the requirements of the Law. 

 

The Law sets out the terms under which a Realtor is entitled to his commission:
The principle condition is that the Realtor sign the client upon a written contract for Real Estate Brokerage Services. It is the responsibility of the Realtor to ensure that the client signs upon a detailed contract, otherwise he shall not be able to claim any brokerage commission.

The contract must include essential details, without which it will not be a valid and binding contract:

• The names and identity numbers of both client and Realtor.
• The type of transaction – rent or purchase.
• A description and exact address of the property in question.
• An estimated price and the amount of agreed commission.
• Client Signature – without the signatures of both the client and the Realtor, the contract is not valid.
As mentioned above, the Realtor must be licensed and he must also be the effective party who brought about the engagement of the buyer and seller in a binding agreement. The District Court has held that being the Effective Party is a strict requirement in order for a Realtor to be eligible for his commission.

 

• A Realtor may not broker a real estate transaction in which he has a personal interest, unless he has disclosed this to the client and the client has agreed to this in writing.
• A realtor my not prepare or aid in the preparation of documents of a legal nature relating to a real estate transaction and shall not represent a client in legal negotiations ahead of the preparation of such documents.

 

An exclusivity agreement is a unique method for engagement between a client and a Realtor. The agreement grants exclusivity to the Realtor and stipulates that commission will be paid to the Realtor, sometimes even if the property was sold not as a result of the actions of the Realtor. However, such agreement also requires the Realtor to work even more diligently to market and promote the sale, since it precludes any other broker from earning a profit from their involvement.

The exclusivity agreement does not automatically entitle the Realtor to a commission and the legislator set out a number of terms and restrictions to the entitlement of exclusively signed Realtors to their commission:
• The Realtor must be the Effective Party.
• The exclusivity period is limited to 6 months for a residential property and 1 year for any other property – (each period commencing from the initial signature upon the contract with the Realtor.)
• An exclusivity agreement without a specified term for a residential property will expire 30 days from its signature, while such an agreement for all other properties will expire in nine months.
If the Realtor has signed an exclusivity agreement but has not carried out any of the actions for marketing the property which are determined in the Law or the contract itself, the contract will terminate after one third of its specified term.