Afik HanahalMemorandum of understanding (Zichron Dvarim)
In short
A memorandum looks like a "preliminary summary", but a court may treat it as a complete contract if it is in writing and includes the essential details (parties, property, price). Then you are bound - even if the "real" contract is never signed.
The professional explanation
Section 8 of the Land Law requires a land transaction to be in writing. A memorandum meeting that requirement and showing intent and certainty (essential terms) is a contract. Backing out may lead to damages or enforcement.
It also has tax significance: under the Real Estate Taxation Law the "sale date" can be the memorandum date, from which the 30 days for declaration run. Brokerage fees may also fall due at that point.
If you sign anyway: state expressly that the document is non-binding and conditional on a detailed contract, due diligence and lawyers' approval; limit it in time; and place any deposit in escrow rather than with the seller.
Example from the field
A buyer signed a memorandum for a Sharon plot and paid a deposit. Their lawyer's checks revealed a lien. The seller refused to cancel, and the buyer needed litigation to get out - all because of a half-page document.