Buying a property in Israel through receivership, liquidation, or enforcement can offer unique opportunities, but it also adds complexity, especially regarding broker involvement and fees. As of March 9, 2025, brokers must inform buyers if a property is being sold through a legal proceeding. While this ensures greater transparency, buyers should understand that a broker may still be entitled to commission if their actions were instrumental in bringing about the sale. Recent court rulings highlight when and how brokers can claim fees, helping buyers navigate the process with confidence.

In a typical real estate transaction in Israel, the seller negotiates directly with the buyer, often with the help of brokers. In a court-supervised sale, however, a court-appointed receiver or administrator manages the process, and the final approval must come from the court. This limits the seller’s control and changes how the transaction unfolds.

Although brokers have less influence over a sale conducted through legal proceedings, Israeli courts have recognized that a broker may still be entitled to commission if they played a meaningful role in bringing about the deal.

When Are Buyers Expected to Pay a Brokerage Fee

The key question is whether the broker was the “effective cause” of the sale. If the broker introduced you to the property, provided significant information, helped you prepare an offer, or assisted you during the bidding process, they may have earned the right to claim a fee, even if the final sale went through the courts.

On the other hand, if the broker’s involvement was limited — for example, if they simply forwarded basic information without actively supporting your purchase — they may not be entitled to commission. Ultimately, whether commission is owed depends on the specific circumstances of each case.

New Disclosure Rules: What They Mean for Buyers

The new regulations that came into effect on March 9, 2025, obligate brokers to inform buyers early in the negotiation process if a property is being sold through a legal proceeding. While this new disclosure requirement ensures greater transparency, it does not cancel a broker’s right to commission if their actions were instrumental in bringing about the sale.

What Israeli Courts Have Said: Key Cases

Israeli courts have issued several important rulings that shape how brokers’ rights are treated when properties are sold through legal proceedings:

• David v. Gabay: The broker was awarded commission after accompanying the buyer through the bidding process, helping submit the offer, and handling the deposit.
• Peretz v. Eisenberg: The court ruled that selling a property through receivership can immediately break the connection to the broker, unless the broker had significant involvement before legal proceedings began.
• Ohayon v. Arobas: The court clarified that brokers are not automatically disqualified from claiming commission in judicial sales. Even when the broker cannot influence the final sale price, they may still be considered the effective cause if they introduced the buyer to the property.
• Kamli v. Kedoshim: Although the broker was not involved in final negotiations, their initial actions in bringing the buyer to the sale process were enough to establish their right to commission.
• Levi v. Abir: The court noted that if brokers are discouraged from presenting judicial-sale properties to buyers because they fear not being paid, buyers could lose access to valuable purchasing opportunities.

What Factors Do Courts Consider

When deciding whether a broker was the effective cause of a transaction, courts generally look at:

• How similar the initial offer was to the final contract
• How close the payment terms were between the original offer and the final deal
• The amount of time that passed between the broker’s involvement and the sale
• The intensity of the broker’s efforts (meetings, communications, assistance)
• Whether another party contributed significantly to finalizing the deal
• Whether the other party paid brokerage fees
• Whether the same buyer and seller remained involved throughout
• Whether the broker’s early efforts laid the foundation for the deal

Tips for Buyers Working with a Broker

If you are considering purchasing a property through legal proceedings, it is important to confirm early on whether the property is subject to a legal process. Make sure you understand the broker’s role and the services they are providing, and review the brokerage agreement carefully, with particular attention to the fees. It is also advisable to keep a record of all communications and support you receive from the broker. Working with a trusted and knowledgeable broker can make a significant difference in navigating the complexities of a property legal proceeding.

Final Thoughts

Buying a property under receivership or through other legal proceedings in Israel can offer unique opportunities, but it also demands careful attention. With the new disclosure rules in place, buyers can move forward with greater confidence, understanding both the process and their obligations.

By working with experienced professionals and being informed about the role of brokers in judicial sales, buyers can avoid surprises and secure the right property at the right price.