Tender Guarantees

Submitting a bid in land tenders of the Israel Land Authority (ILA) requires prior preparation, where one of the key elements is the tender guarantee (also known as a "bid guarantee"). This is a threshold requirement for participation in the tender process, the purpose of which is to demonstrate the seriousness of the bid and the commitment of the bidder to act in accordance with the terms of the tender if the bidder wins.

The amount of the guarantee usually ranges from 1% to 5% of the total value of the offer, and sometimes can even reach up to 10%. The guarantee must meet exactly the conditions and wording required by the Israel Land Authority (ILA) in the tender documents. Any deviation, even the smallest, may lead to the rejection of the entire bid.

Possibilities for issuing a tender guarantee for developers

There are several options for issuing a tender guarantee, depending on the tender requirements and the bidder's credit structure:

  • Banks: The traditional track for issuing a bank guarantee as part of a guarantee facility. In many cases, the bank will require the provision of collateral, and sometimes also a cash deposit, in a way that may reduce the available liquidity and affect existing credit facilities.

  • Insurance companies: In accordance with the tender requirements, insurance companies with appropriate licensing can issue guarantees for tenders, usually through guarantee or surety-insurance products, subject to underwriting and conditions set by the issuing body.

  • Non-bank entities: In recent years, fast digital solutions have emerged that allow the issuance of a guarantee online, without the need for a deposit. Israel Land Authority (ILA) itself has moved to work with digital guarantees, and there is a list of entities authorized by the Accountant General to issue such guarantees.

Financing After Winning an Israel Land Authority (ILA) Tender

In Israel Land Authority (ILA) land tenders there are situations where the winner's bid guarantee is applied as an initial payment toward the consideration. After the award, the winner is required to complete the remaining payment in accordance with the schedules established in the tender brochure. Failure to meet the deadlines and conditions after the award may lead to cancellation of the award and forfeiture of the guarantee or other remedies in accordance with the established conditions.

Reiten Mortgages and Real Estate operates in the field of credit consulting for real estate developers and provides financial preparation for Israel Land Authority (ILA) land tenders, including the planning of guarantee frameworks as part of the overall credit structure. A combination of examining the tender requirements, planning the guarantee framework, and preparing for the payment mechanism after the award enables careful management of the tender phase until the land purchase is completed.

Are you interested in preparing for a tender guarantee for the purchase of land from Israel Land Authority (ILA)? Leave us details or call us at *8537 during business hours; we will be happy to assist.