Background
The Israeli legislation (the Land Law and the Interpretation Law) provides the term “Land” an extended definition. Land, meaning “Land, everything built or planted on land and every other thing permanently fixed to land, except for severable fixtures.”
The Land Law, 5729 – 1969; (hereinafter the: “Land Law”) refers to two dimensional and three dimensional spaces of land. For example, pursuant to section 13 under the Land Law “A transaction in land applies to the land along with all that is listed in sections 11 and 12, and a transaction in a certain part of the land is of no validity, and all where there is no other provision under the Law” (except for an apartment in a condominium, to which there is specific reference in the Law).
Similarly, pursuant to section 11 of the Land Law, “The ownership of a land lot extends over the entire depth under the land parcel, subject to laws concerning water, oil, mining, minerals and the like, and it extends over the space above it, however, subject to any law, such is not to prevent passage through the upper space.” In other words, the land includes the underground layer and the upper layer, including the space above it.
As a result, in the two dimensional aspect, the owner is prevented from trading in a specific part of land, but rather in a non-specific part. The same goes for the owner of a residential estate, who may not sell part thereof. In the three dimensional aspect, the existing legal situation does not enable owners to sell the upper space above the land to another, the building constructed on the land to another and the underground space to yet another.
Attachments to the land
The definition of ownership of land addresses not only the dimensional world of land, but rather the physical aspect as well. Section 12 under the Law prescribes that “Ownership of Land applies also to all that is built and planted on land as well as every other thing permanently fixed to land, except for severable fixtures, regardless of whether the fixed assets had been built, planted or attached by the land owner or by another person”. In other words, in respect of a structure on the land, trading in a part of the structure separately from the land is not allowed and the two are attached together.
The attachment of the land to that constructed on it, derived from the provisions under the Law, is required due to the various uses that may be carried out in respect of the land and the freedom granted to the owner to carry out such use. However, such an attachment may constitute a problem in a number of situations. For example, in the event where the land owners seek to rent it out to a lessee, who on his part seeks to construct on it a building that will serve him for the duration of the rental term, and it is agreed that the building will be the lessee’s property. What is to be the building’s fate on the day the rental will expire? Likewise, what will be the fate of a situation where a parent had allowed one of his children to construct a building on the land for a limited duration that had expired, or in the event where he has a need to use the land for other purposes.
On the one hand, the building had been constructed by the lessee given the lessor’s consent, as the lessee or permitted user had invested in it considerable costs. It may be assumed that upon the expiration of the term he will have the expectation to return his investment. On the other hand, since it is stated as aforementioned that the Land Law does not allow the separation of the land from that which is constructed on it, it is unreasonable to accept a situation where other use of the land will be prohibited until the “financial dispute” between the parties is resolved.
The property laws, primarily section 12 as stated above do not allow separation between the ownership of the land and that which is constructed on it[1]. However the one who had funded and constructed the building at his expense may negotiate on the sum of compensation he will receive. For example, it is possible to agree upon in advance regarding a mechanism that enables the lessee to obtain the building’s value, or from the beginning reduce the rental fees paid by the lessee, in a manner that will reflect the cost of construction.
Three dimensional plots
Currently in Israel complex projects are executed, extending over various land layers (tunnels, underground trains, above the ground bridges, etc.), and a situation is created where although there are several valid plans that enable various zoning of the land, it is not possible to execute optimal uses of that same land due to the rigidity currently existing under the Law. These matters are reinforced when discussing built areas of high density and lack of alternatives of free land in favor of developing underground or above ground infrastructures[2].
In light of the fact that land is a limited resource on the one hand, and in light of the fact that the Land Law had been legislated approximately 50 years ago and is not compatible with the current reality, a need has arisen for amending the Law, specifically in light of accelerated technological development and increase of the variety of uses that may be carried out with the land.
And so, recently the Knesset had approved by second and third readings a bill intended to enable the possibility to split the land on the three dimensional tier, and implement the separation of ownership of the land into spatial units that will constitute a separate object for transactions and rights as well as enable the registration of voluntary transactions as well as expropriations based on approved plans, in a manner that will allow effective and optimal utilization of the land[3].
This way, per the Law Bill, a third dimensional plot will be defined, which will constitute a new registration unit with final borders on the three dimensions, including the height dimension. The plot will be allowed to be only on land registered with the Land Administration and will be allowed to include both the underground or above ground spaces, and a combination of both.
A transaction in a three dimensional plot will thus constitute a separate object for ownership, rights to the land and transactions. This will allow a situation where it is possible to trade in an underground plot the borders of which may differ from the plot above it. Similarly, the proposed amendment enables expropriation of only the part of land that is necessary for the expropriation’s purposes, and this way the ownership of the rest of the land will remain with the original owner.
It should be noted that ownership of the three dimensional plot is limited to absolute dimensions, while the ownership rights to the remaining plot will continue extending over height and depth (except for the portion that had been registered as a three dimensional plot). The general provision in respect of subordination to laws concerning water, oil, minerals etc. will continue to apply to the three dimensional plot as well, and so will the lack of ability to prevent passage through the entire height of the plot.
It should be clarified that in order to conduct a division of land that includes a three dimensional plot, it is required to comply with the requirements set forth in the Land Law and the Planning and Building Law, which include plans or a drawing that had been approved by the district and national planning institutions set forth under the Planning and Building Law or expropriation under law.
Conclusion
The land laws require clear definitions in respect of the land dimensions and uses thereof. The technological and demographic developments along with the fact that the land resource is limited, require the adaptation of the laws to the daily reality. The Bill that had been recently approved, which redefines the three dimensional plot, should lead to effective and optimal utilization of this resource.
[1]Although under tax laws the matter is not absolute, see CA 7394/03 R.A.R.D Construction Company Ltd v. the betterment tax Administrator Rehovot, PD 52 (1) 57, 82; CA 609/93 Merom Aviation Services Ltd. V. The Airports Authority, PD 48 (5) 381
[2]See CA 119/01 Akunas v. the State of Israel (published on Nevo on 22.1.03)
[3]See the explanatory notes for the Land Law Bill (Amendment No. 34)(Three Dimensional Plot), 5779 – 2018.