Jerusalem church land controversy at standoff between tenants, investor group

Hassan-Nahoum: Developers’ demand to register ownership is ‘pure greediness’ • ‘This is not about philanthropy,’ Ben-David says

View of the Knesset (foreground), were the Israeli parliament residese,the tall buildings in the back are called The Wolfson Towers and behind them are the neighborhoods of Rehavia, Shaarei Chesed and the downtown. (photo credit: NATI SHOHAT/FLASH90)
View of the Knesset (foreground), were the Israeli parliament residese,the tall buildings in the back are called The Wolfson Towers and behind them are the neighborhoods of Rehavia, Shaarei Chesed and the downtown.
(photo credit: NATI SHOHAT/FLASH90)

A land dispute involving plots of land previously owned by the Greek Orthodox Church continues to challenge hundreds of city residents.

In the middle, almost helpless, are residents who bought apartments in some of the capital’s most expensive neighborhoods and have discovered that they are being asked now to pay up to millions of shekels to keep the properties they purchased years ago.

KKL-JNF, which had previously leased the land on behalf of the residents, was forced last year to remove a warning notice on the church land that it had leased since the early 1950s.

The court order paved the way for the Nayot Komemiyut Investments group, controlled by Jerusalem’s Ben-David family, which led a group of investors who bought the rights a few years ago to now collect payment from the residents. In some cases, people have been asked to pay more than NIS 1 million to have their apartments registered in their name.

Snow view of the old city in Jerusalem, February 18, 2021 (credit: MARC ISRAEL SELLEM)Snow view of the old city in Jerusalem, February 18, 2021 (credit: MARC ISRAEL SELLEM)

In addition, The Jerusalem Post has learned that the original investor group led by the Ben-David family has begun taking offers from outside investors, including from some prominent real estate developers in the United States. Insiders say the amount being discussed to sell the land rights is, in some cases, over NIS 600m.

Today there are more than 1,100 tenants who live in homes on church lands in the neighborhoods of Talbiyeh, Rehavia and Nayot. On one hand, KKL is busy trying to get back part of the money it paid for a deal with the church, a deal that turned out to be fraudulent. On the other hand, attempts by former legislators and municipal officials to lead legislation that would protect those residents is not advancing.

One official trying to help is Deputy Mayor of Jerusalem Fleur Hassan-Nahoum, who is working to advance legislation in the Knesset that will protect the tenants and, on the other hand, is using her influence and legal experience to help the residents in their dealings with the Ben-David group.

In 2000, the broker Yaakov Rabinowitz – with the assistance of David Morgenstein – claimed that in exchange for a brokerage fee of $20m. he would be able to extend KKL’s lease. KKL transferred the amount to Rabinowitz, who later turned out to have been a fraudulent operator. The contract was eventually annulled by the court, and Morgenstein and Rabinowitz were convicted and sent to prison.

Since then, KKL has been chasing the money it lost in the scam, and in 2016 the church sold its ownership over the lands to Nayot Komemiyut, a group of investors led by lawyer Noam Ben-David.

Following the transaction, Ben-David and his partners stepped into the shoes of the church, and after settling a side dispute with KKL, the company effectively became the owner of all the church land, including more than a thousand apartments.

The result is that in about 30 years, KKL’s leases will expire and Nayot Komemiyut can potentially demand that the tenants leave their homes.

Hassan-Nahoum fears that this is already happening on the ground. The investors have already started approaching some of the tenants – many of them elderly – and offered to let them buy the land on which their home was built for 30% or more of the apartment’s value.

“This is a huge amount. Considering the fact that those tenants have already paid millions of shekels to purchase the apartments,” explained Hassan-Nahoum. “This is pure greediness, and I am obliged to help those residents against the illogical demands of the developer Ben-David. Nowhere in the world is it acceptable to demand such high percentages, so I make sure to attend every one of his meetings with residents, and warn them against these excessive demands.”

A typical four-room apartment in these areas can cost up to NIS 3.5m. or more.

“In other words, in order to register ownership in the Land Registry, the developers ask each owner of an apartment for an amount of approximately NIS 1.3m. For those who advance with them in negotiations, they offer a discount, but it is still about NIS 1m.,” Hassan-Nahoum said. “As the lease expiration date approaches, the amount that the developers will demand from the apartment owners is expected to increase; this is insane. People bought apartments believing that KKL is behind them, but today they are alone against the real-estate sharks.”

The issue has been brought before Housing and Construction Minister Ze’ev Elkin. One recommendation has been to allow the Ben-David group to collect payment for a transfer of ownership, but to cap it to a fair market amount at something like 5% of the home’s value.

In response to questions from the Post, Ben-David claimed that there should be no comparison between the tenants who bought their apartments in the 1960s and those who purchased apartments in recent years and – for the most part – do not even live in Israel.

Ben-David also claims that at the moment there is no negotiation with the tenants and he refused to specify the percentage that he will demand if they ask to negotiate with him for the rights to the apartments.

He dismissed the 5% option and said it was unrealistic and therefore could not be a benchmark in this case.

“Those who acquired these apartments at an incredible bargain price because of the looming deadline of the end of the lease cannot expect to continue to obtain such conditions,” he said. “This is not about philanthropy, this is about conducting business.”