(photo credit: SHMUEL BAR-AM)
In our previous column, we started navigating the maze of property ownership in
Israel. We discussed the Tabo, the Israel Land Registry, which is the government
database for property rights in Israel. We also mentioned the Minhal (Israel
Lands Administration), the governmental body that manages all of the land owned
by the State of Israel, which consists of over 90 percent of the country’s land.
The land owned by the state, which is most of the country, is officially termed
“Israel Lands” and often called “Minhal property.”
The need for the
Minhal stems from the Basic Law: Israel Lands, which declares that all
state-owned lands will remain such and will not be sold or given to
Therefore, a mechanism was set up by which the State of Israel
(via the Minhal) leases its land for long-term periods (usually for a period of
49 or 99 years).
The result is that today, most “homeowners” in Israel
don’t actually own their home outright, but rather they lease it long-term. At
the end of the lease period, the lease contract must be renewed. This is done by
filing a request to renew with the Minhal. The complexity, cost and duration of
the renewal process can vary, depending on the type of property owned, as well
as the nature of the lease terms.
Long-term leasing feels like ownership
(and it is a lot like ownership). However, there are various fees to be paid to
the Minhal in such types of transactions, including lease fees, permission fees
for transfer of the property rights to another and permit fees for additional
construction. Navigating these correctly can save a lot of money. For this
reason, an apartment that is privately owned and registered in the Tabo will be
more highly valued than a similar apartment registered with the
When purchasing a “Minhal property,” one must register his or her
leasing rights both in the Tabo (if possible) and in the Minhal. The Tabo
registration will record the lessee’s (the buyer’s) name and I.D. or passport
number, as well as the length of the lease term. Sometimes, upon a purchase it
could be worthwhile to capitalize the lease fees. This is called hivun in
Hebrew, and it means the lease fees have been paid in full for the entire lease
term and/or that the Minhal’s permission is not needed for transactions on that
particular property. Very often you can negotiate with the Minhal and pay off
the hivun for a lot less than the fees you would pay over the ensuing terms of
Over the years, the Minhal has begun to attract more and more
public criticism due to the increasing bureaucracy, the heavy costs levied on
the buyers and sellers and the difficulty and uncertainty one has had to face
when trying to navigate through the Minhal’s requirements. As a result, a reform
of the Minhal is under way in an effort to remove red tape and cut costs for
This reform began in 2009, but it is taking an inordinate
amount of time. As part of the reform, ownership of 800,000 homes would be
transferred to their private “owners” (who until now were leasing their homes
from the state), and the long-term leases on these properties would be voided.
The ownership property rights would be registered directly in the Tabo, under
the names of the individual homeowners.
So far, approximately 200,000
homes have completed the process. At this rate another decade will pass before
we can see a real difference.
Another significant part of the reform in
progress is a complete bureaucratic overhaul of the Minhal, transforming it into
a more efficient and user-friendly system to be called The Israel Lands
Authority – not a very big change from the current Israel Lands Administration.
So, what’s in a name? Not much really, and the differences on the ground are not
yet so significant.
One welcome step toward greater clarity and certainty
was recently announced by the Minhal. A new codex, or compilation of
regulations, has been created that summarizes and organizes all decisions given
by the Israel Land Council (a council authorized to make decisions regarding
Minhal property). The new codex is organized by topic (with chapters and
subchapters). The creators of the codex aimed not only to collect the decisions
given over the years, but also to make them available to the public, rewrite any
unclear decisions and regulations and resolve any contradicting decisions. The
codex was launched via the Minhal’s website about two months ago and is
currently in a trial run.
There is still much to be done, and the reform
is far from being complete. However, it is a major step in the right
In this series we are attempting to provide readers with a
basic understanding of the Israeli structure for property ownership. Indeed, the
road to owning property in Israel can be fraught with various legal pitfalls.
That said, when navigating the maze with the guidance of professional experts,
you will likely emerge from the maze unscathed, as well as the proud owner of
your own share in the Land of Israel.
In upcoming columns we will look at
the difference between land held by the Keren Kayemeth LeIsrael-Jewish National
Fund (KKL-JNF), the Minhal and the vaguely named Development Authority (Reshut
Hapituach). Who are these organizations and bodies? Are they governmental or
private? Do they owe you a legal duty, or do they work to maximize their income?
How do they impact upon your ownership and thus the value of your property
purchase? We will also look at the standing of real estate leased on church
land. Some of these leases are close to running out.
If you are a
leaseholder in one of these, should you be worried? Hopefully all we be made
clear in subsequent columns.This column is meant to provide general
information and is not to be seen as legal advice. We highly recommend you
consult a lawyer before engaging in any real-estate
Dr. Haim Katz is a senior partner
in a law firm with offices in Tel Aviv and Jerusalem that specializes in real
estate, international trusts and family, inheritance and corporate law. Sam Katz
is a jurist who lives in Jerusalem.