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

He’arat azhara is an authorized warning note registered in the Land Registry (Tabu), usually by an attorney, regarding a defined piece of real estate (e.g. an apartment, shop, or lot).  The note verifies the existence of a written undertaking by the owner of the property, or the owner of the rights to the property, indicating a warning to other parties who wish to carry out a transaction involving this property.   After a he’arat azhara has been registered, and as long as it has not been deleted, no other transaction that conflicts with the nature of the warning note may be registered in the Land Registry.

Therefore, one of the most important actions to be taken when purchasing a real estate asset in Israel is to register a he’arat azhara in your favor on the purchased property immediately upon signing a contract and transferring the first payment. Thus, if, after registration, the seller tries to sell the apartment to a second buyer, and the second buyer wants to transfer ownership of the apartment to his name in the Land Registry, he will not be able to because the transfer contradicts the nature of the warning note.

There are, however, two cases in which it is possible to register a transaction in the Land Registry that contradicts the content of an existing warning note. Firstly, where the owner of the existing warning note has agreed to the execution of a conflicting transaction, and secondly, where a judicial order was issued instructing the registration of the conflicting transaction.

Registration of a he’arat azhara is also one of the collaterals recognized by the “Sales Law”, through which purchasers’ money can be secured, and is especially popular in Tama 38 projects, for which banks refuse to provide a bank guarantee as security. However, among all types of collateral, this form is considered less secure, and in a number of cases in recent years, the warning note did not provide home buyers with full protection of the funds paid in connection with the purchase of the apartment. As a result, they lost a significant portion of the money they paid the developer for the apartment.