The Cautionary Notice is a Caution recorded in the Title Registry, which testifies to the fact that the owner of the rights to the property made a commitment to carry out a transaction involving the property rights. The recording of a Cautionary Notice does not in itself constitute a final record of such a transaction; however, it grants the owner of the Cautionary Notice an important protection in that, for as long as the Cautionary Notice is on record, no transaction that contradicts its contents may be entered in the Title Registry.
A Cautionary Notice protects its owners against a contradictory transaction in the future. However, if the seller executed a prior transaction that contradicts the performance of the current transaction, the first buyer will be permitted to go to court and request that the Cautionary Notice of the second buyer be removed.
The Cautionary Notice provides immunity to its owners and priority over parties attempting to place liens against the property. Also, it grants its owners priority in the event that the seller declares bankruptcy or enters receivership. On the other hand, if no Cautionary Notice is recorded, the buyer will not be able to exercise his/her rights to the property in the event that the seller has debtors and declares bankruptcy, or in the event that a lien is placed against the property. Therefore, every buyer is well-advised to record a Cautionary Notice in his/her favor as soon as possible. The cost of recording a Cautionary Notice is only a few tens of shekels; the Caution is recorded after a request form is filled out and the original agreement between the parties is presented to the Land Registry recording authority.
In accordance with the Apartment Sale Law, a contractor selling an apartment must guarantee the buyers money in one of the following ways:
Bank guarantee
Insurance policy indemnifying the buyer for the amounts paid to the contractor in the event the buyer does not receive the apartment;
Lien against the apartment in favor of the buyer;
Recording of a Cautionary Notice in favor of the buyer.
A contractor who does not provide the buyer with one of the above guarantees is violating the law.