In this article, I will discuss the two main advantages to purchasing real estate in the USA as compared to Israel from a legal and business/economic point of view.
Buying real estate
The process of buying real estate in the US is very different from buying property in Israel. For several reasons, the process of purchasing a property in the US is much safer than in Israel, a fact that should reassure investors purchasing property abroad.
If I had to point to the main reason why buying property in America is more secure than buying in Israel, I would undoubtedly choose the institution of the title company, for which there is no equivalent in Israel. A title company verifies
that the seller has the right to sell the property to a buyer, and ensures that the title to the real estate is legitimately transferred to the home buyer at the end of the process.
These companies are a neutral player in the transaction, and their purpose is to look out for the interests of both parties, ensuring that the real estate deal is carried out securely in all its parameters. The title company employs attorneys and accountants that are exclusively licensed for this purpose and are the equivalent of lawyers in Israel. However, instead of representing only one side (as in Israel, where each side is represented by their own lawyer), in the US the title company represents both sides, the seller and the buyer. The title company has several functions, among which are the following:
- to ensure that there are no liens or foreclosures on the property and that it is transferred to the buyer free of any such encumbrance; 2. to ensure that the seller is the registered owner of the property and is not selling a property that does not belong to them;
- to ensure that the property is transferred to the buyer without any debts (electricity, water, property taxes, etc.);
- to serve as trustee of the funds and be responsible for ensuring that everyone who is a party to the transaction will receive their money, i.e. the seller, the district, the broker, etc.;
- to register the property in the purchaser’s name in the district registry office and provide an authorized certificate to the purchaser.
On the day of the closing, when the transaction is completed, both sides are responsible for carrying out their part of the agreement after the title company checks the legality and conditions of the transaction and everything that this entails. In addition, an enormous advantage in buying real estate in the United States is title insurance provided by the title company to the purchaser on the property they are investing in. This assures both sides that the property may be registered free and clear, i.e. that there is no lien or foreclosure against the property on the day of the closing, allowing the transaction to proceed. If, after a number of years, it becomes apparent that the title company authorized a transaction, and there was a debt owed on the property of any type or amount, then the title company through its insurance coverage will immediately pay any debt owed on the property at the time of the transaction which it did not discover.
The cost of the title company’s service and title insurance are relatively inexpensive for the assurance they provide, usually costing in the range of US$300-500. The service of the title company is vital in preventing property fraud in the United States and should not be overlooked. There are many
investors who are unaware of this institution and so do not utilize its services.
In the US, registration is done by the county, which is the equivalent of the Israeli TABU. The TABU registration process in Israel can take months, and sometimes even years, to complete. In the United States, registration is fast; the property will be registered with the county in the name of the purchaser within a few weeks.
In order to ensure that the property is actually registered in the name of the purchaser, one should check the relevant county’s website as each county has its own registry for properties located within its jurisdiction. For instance, if the property is in Buffalo, New York, then the county with the registration is Erie County. On most county websites, there is a button that clicks through to the property registry page.
You can check a property’s ownership in two ways. One is to search for the registered owner by typing in the owner’s name; the other is to type in the property’s address. This simple action allows you to see the owner of any building in the United States.
Maximum access to information
Another major advantage is the public’s access to accurate and reliable information. In the United States, unlike in Israel, the financial/legal/statutory information available is immense, transparent, and available to anyone for every property. There is no doubt that having reliable, dependable information available is the best method for making informed, appropriate decisions.
Likewise, everything in America is online, and on each county’s website one can view the property’s history, adjacent properties, how much was paid for the property, how much it sold for, the number of rooms, etc. It is important to note that when buying property in the United States, one shouldn’t underestimate the importance of in-depth background research. and not just
rely on information provided by the seller or a third party who does not represent your interests. It is vital that you check the facts carefully before you proceed at each stage so that you ultimately end up with an asset and not a burden.
The United States is very sophisticated in the world of real estate transactions, and once you are acquainted with it, you will realize how far behind the State of Israel lags in the way real estate deals are conducted. With a little effort, one quickly becomes confident in accessing the relevant websites and the plethora of up-to-date, accurate information available.
