The caution note (he’arat azhara): legal protection in property deals

What is a caution note (he’arat azhara)?

The legal process of registering a caution note involves recording it in the Tabu. This note serves as written evidence of a commitment by the landowner or the holder of the rights in the property to enter into a transaction or to refrain from one. As a rule, a caution note is submitted in connection with the rights of the property’s purchaser during the interim period, from the day the sale agreement is signed until the day the proprietary rights are registered in the Tabu upon completion of the transaction.

The main purposes of a caution note are twofold:

• The purpose of registration is to give notice and provide clarification to the general public, with a specific focus on those with an interest in the real estate property that is the subject of the note. It is important to understand that landowners are under a legal obligation either to enter into negotiations with potential buyers or to refrain from negotiations altogether.
• The purpose of registering a caution note on the property is to protect the rights of the initial purchaser by preventing any conflicting transaction in the property on the part of the landowner. This ensures that the rights of the first buyer are secured in the purchase of land or an apartment.
• Registering a caution note in the land registry serves to inform and warn the public of any commitment the landowner has taken upon themselves in relation to the property. These commitments, as represented in the caution note, may consist of a requirement to carry out a specific transaction or, alternatively, an instruction to refrain from carrying out any transaction that could affect the property. This information is available to the public and can be easily accessed for inspection through the issue of a Tabu extract (nesach tabu).
• For those considering purchasing a property, it is essential to exercise extra caution and to heed an important warning. You must make sure that the property in question is free of any commitments and has not already been promised to another potential buyer.
• When taking out a mortgage, it is customary to include a caution note. This note serves to record the bank’s interest in the property, or to give effect to a decision of a court or an authority. To register a caution note, an application and the required documentation must be submitted to the land registry office responsible for registering the property.

There are several types of caution note that can be registered:

In addition to registering a caution note that attests to the nature of the commitment to enter into, or refrain from, a transaction, there are several other types of note that can be recorded:

• Right of first refusal – this note is registered in order to establish, for any party involved, the right to receive benefits from the property before others. It serves as protection in cases such as a parent buying an apartment for their child and wishing to prevent any transactions made without their knowledge that could affect the ownership of the property.
• When taking out a mortgage on a property, an appropriate note must be registered with the bank. This note is a precondition for the transfer of the mortgage funds and serves as official documentation of the mortgage agreement. While a deed is registered in favour of the bank, transactions in the property can still take place. However, if the mortgage is to be transferred to another property or discharged, the registration must be settled accordingly.
• An easement is a written declaration granting certain ownership permissions of a property to a third party.
• A note pursuant to an order of a court or a competent authority – when a court or another recognised authority issues an order, a caution note can be registered with the intention of preventing actions or transactions that conflict with the authority’s decision regarding the property, including the transfer of ownership.

If you want to register a caution note, how can you do so?

To register a caution note, you should use the services of a lawyer who can register the note online on the office’s website; alternatively, you can visit the land registry office during public reception hours or send the required documents by post. Registering the application involves paying a fee for registering the note, which can be paid in advance through the government services and information website or at the office itself. The following documents must be submitted in order to complete the registration process:

• To register a caution note, an application form must be filled in. This form requires signatures from those making the commitment, from the beneficiaries, or from both parties involved. In addition, a certified lawyer or an authorised registrar must verify the form as a transaction deed.
• A written pledge – whether in the form of an authentic contract, an irrevocable power of attorney, or a copy certified by a lawyer – is the document in which the holder of the proprietary rights undertakes to carry out, or refrain from carrying out, a transaction involving this property.
• When submitting an application to register a caution note signed by the beneficiaries alone, it is necessary to attach a certified copy of the debtor’s identity document that is an exact copy of the original.
• Confirmation of payment of the fee for the action.
• A copy of the applicant’s identity document.
• In the event that the property owner has not made a commitment in relation to the said property, a letter of consent must be requested from the owner themselves.
• At the registrar’s discretion, additional documents may be required.

If a caution note needs to be deleted or cancelled, what steps should be taken?

• In the context of registering ownership of land, or the fulfilment of a mortgage or another obligation, a caution note serves its purpose.
• Once registered, a caution note can be deleted from the register in the Tabu. However, the registrar does not delete the note automatically, but requires an application from one of the parties involved. Before deletion, the registrar will notify the party in whose favour the note was registered of the deletion.
• Notes registered under orders of a court or a competent authority can be deleted only pursuant to a request from the court or another authorised body.