Introduction
Over the last few years, more and more urban renewal projects are built around the country, namely projects of structural reinforcement against earthquakes pursuant to the provisions of National Outline Plan (T.M.A.) 38 (whether through building reinforcement or destruction and construction of new buildings) and “classic” evacuation-construction projects (“Pinuy Binuy”).
Urban renewal projects are usually implemented through utilization of existing construction rights and usage of common property for the utilization of these rights. Therefore, there is a constant clash between the private proprietary system (that is, the apartment itself) and the common proprietary system (that is, the common property). The fact that a large portion of the public in the country resides in condominiums, naturally complicates the balance between the different and conflicting interests of the apartment owners, especially with regard to the common property.
The most prominent example of such complexity is a situation in which some apartment owners in the building are interested in the execution of an urban renewal project, while other tenants refuse to go ahead with the project. In such case, one needs to create balance between a person’s right to utilize and optimize his rights a and his apartment’s condition, and another person’s right to avoid depreciation of his share of the common property and be to make (drastic) changes in his private apartment.
Given the importance of the rights on both sides and in light of the increasing number of urban renewal projects, more and more conflicts have arisen between tenants that required specific legislation that would settle them. For instance, the Real Estate Law (Earthquake-Resistant Reinforcement for Condominiums), 5768-2008, deals with projects of structural reinforcement against earthquakes (hereinafter: “the Reinforcement for Condominiums Law”), while the Evacuation-Building Law (Reimbursement), 5766-2006, also known as the Refusing Tenant Law (hereinafter: the “Refusing Tenant Law”), deals with evacuation-construction projects.
Legislation
Both the Reinforcement for Condominiums Law and the Refusing Tenant Law specify mechanisms that enable a majority of the apartment owners in the building to move forward with the execution of urban renewal projects, at the expense of the minority, even without the consent of a 100% of the owners in the building. The two aforementioned laws differ in the way “refusing tenants” are regarded and in the prerequisites they prescribe.
The Reinforcement for Condominiums Law applies to projects of T.M.A. 38/1 and T.M.A. 38/2 and allows a majority of 80% of the apartment owners and 80% of the holders of common property to apply to the Real Estate Registration Supervisor and demand enforcement against the minority. The prerequisite for application of said mechanism is prior issuance of a building permit for the execution of the project.
The Refusing Tenant Law applies to “classic” evacuation-construction projects and allows 80% of the apartment owners and 75% of the holders of common property to file a damages claim to the court against the refusing tenants in order to receive compensation, based on the increase in the apartment value the apartment owners would have gained if the project was executed. The prerequisite for application of said mechanism is prior official declaration that the site in which the building is situated is an “evacuation-construction site” under the Planning and Building Law, 5725-1965, or the Land Taxation Law (Betterment and Procurement), 5723-1963.
As we can see, both the Reinforcement for Condominiums Law and the Refusing Tenant Law determine mechanisms that enable a majority of apartment owners in the building to “force” the implementation of the project upon refusing tenants (whether through enforcing the project upon them or by requiring them to reimburse the other apartment owners). The basic assumption of the legislator in this case was that the project implementation would eventually benefit the refusing tenant, and therefore justifies a certain temporary suspension of his proprietary right.
At the same time, the reasons behind the refusing tenants’ objections are certainly meaningful. In some cases, tenants try to “extort” the other apartment owners (and even the entrepreneur) and condition their consent to the project on certain benefits or plainly they do not show any grounds for their objection. Such objections are not considered legitimate. However (as specified in the Refusing Tenant Law), some situations do form reasonable grounds for objection to the project, for instance: the transaction is not financially worthwhile; the refusing tenant is not offered alternative residence for the period during which the building will be destructed and rebuilt; the refusing tenant is not offered appropriate securities; the refusing tenant’s personal situation makes it unreasonable for him to accept the transaction; the refusing tenant or one of his relatives is disabled (yet there are limitations to this justification as well).
Judgements regarding refusing tenants
Judgements of the Real Estate Registration Supervisor often define the authorities of the deciding supervisor and their scope, including factors he needs to bring into account (see the Shomrony Judgement[1], the Zohar Judgement [2] and the Roth Judgement [3]).
Some judgements of the Real Estate Registration Supervisor specifically focus on the grounds behind a tenant’s objection, which is sometimes accepted as legitimate, and sometimes not. In the Shmueli Judgement[4], for example, the Supervisor rejected the claim of refusing tenants who alleged that there was inequality between them and the rest of the tenants. It was ruled that even though the rear apartments in that building enjoyed a larger extension, the distinction was based solely on planning-related considerations and apartments of all “types” gained a completely equal extension.
On the other hand, the Engel Holdings Judgement[5] states that when any tenant is denied the separate entrance to his apartment due to an essential alteration of the stairwell, and when the openings of his apartment are blocked, it is deemed tangible proprietary damage that forms a reasonable objection to the reinforcement project.
In the cases brought before courts by virtue of the Refusing Tenant Law (that is, damages claims), the courts have repeated the list of circumstances that formed reasonable grounds for refusal. They also noted that reasons that did not fall within the scope of said list were deemed unreasonable; in such case, refusing tenants were therefore subject to sanctions in the form of compensations to the other tenants for the damage incurred due to the loss of the transaction (see the Schwartzberger Judgement[6], the Aminadav Judgement[7], and the Keinan Judgement[8]).
Conclusion
In attempting to balance the interests of a majority of tenants who want to execute an urban renewal project and those of a minority of tenants who object the project, the courts and the Real Estate Registration Supervisor consider the proprietary rights of all parties, the terms of the transaction and the nature of the minority’s objections. As a rule, such projects should be advanced in order to maximize the rights of all tenants, but only if it does not materially damage the proprietary rights of any tenant.
[1] Exceptional Civil Appeal (Civil Lawsuit) 4166-04-13 Shomrony vs. Kofman (published on Nevo, 5.1.14)
[2] Civil Lawsuit 494/12 Zohar Sagit vs. Kidron Dganit (published on Nevo, 22.1.14)
[3] Civil Appeal 3700/15 Uri Roth vs. Michal Agnon (published on Nevo. 27.6.16)
[4] Civil Lawsuit 453/14 Shmueli Ofer et al. vs. Frieda Cohen et al. (published on Nevo, 18.6.15)
[5] 05/734/14 H.A. Engel Holdings Ltd et al. vs. Leah Alaluf et al. (published on the website of the Ministry of Justice)
[6] Civil Appeal 3511/13 Regina Schwarzberger vs. Shalom Marin (published on Nevo, 24.7.14)
[7] Civil Lawsuit (Central) 55587-12-11 Rahel Aminadav and 46 others vs. Yekutiel Kazi (published on Nevo, 6.6.13)
[8] Civil Lawsuit (Herzliya) 54823-07-13 Ofir Keinan vs. Lior Moshe (published on Nevo, 22.9.14)