The Fair Rental Law 2017- enshrined protections for tenants

In late 2017 the Knesset passed a law giving greater protections to Tenants in Israel. Let’s dive in and see what it can do for us:

 

The law provides greater certainty in many areas covered by a standard lease agreement and does not allow the Landlord to contract out of most of the clauses that are to the Tenant’s benefit (unless the lease is with a family member).

Although it was included in early iterations of the law, the final version of the law did not limit the Landlord’s right to increase the rent each year, much to the chagrin of many tenants!

 

Who does it apply to?

Landlords and Tenants, as well as Sublandlords and Subtenants, of residential properties – but not student dormitories. A sublandlord does not become a landlord for this law, rather the responsibilities remain with the landlord but the subtenant is entitled ot the tenant’s protections.

Leases for periods between 3 months (including extension options) and ten years (so no short-term rentals).

Leases with monthly rents above 20,000 shekels.

 

What is considered a residential property under the new law?

An apartment must contain the following items in order to be considered legally fit to be rented out for residential purposes:

  • Used for residential purposes
  • A working drainage system
  • Proper electricity and lighting
  • Openings for ventilation and natural light, as well as doors and windows that close them
  • A lock on the front door
  • Drinking water
  • A partition between the bathroom and the living area
  • No unsafe environment to the Tenant or Tenant’s health

The apartment and surroundings have nothing irregular/incompatible with what has been agreed upon, unless the Tenant knew about it at the time of signing the contract or did not notify the Landlord within a reasonable time of discovering it or did not allow the Landlord to inspect/repair it.

There are no third-party rights that impede the Tenant’s ability to use the property or that will counteract the purposes of the lease agreement and the Tenant’s rights under it. The Landlord must ensure this is the case throughout the lease term.

The Landlord must give possession of the apartment on the date stipulated in the Lease, free and clear of any occupants or items, other than items agreed upon in the Lease. The Landlord also has to supply any instructions manuals.

If the Landlord delivers possession in breach of any of the required terms under law, it is a breach of the contract.

 

The lease itself:

The lease must be in writing and signed by both parties. A fully signed copy is to be distributed to both parties too. What details must the lease contain?

  1. The apartment address
  2. Gush (Block) and Chelka (Parcel)
  3. Names, IDs and addresses of the parties
  4. A description of the apartment, furniture and fittings, areas of the common property attached to the apartment and included in the rental
  5. Term of the lease, any option term and details thereof and details of any early termination clause
  6. Rental amount, dates and methods of payments
  7. Any other payments incumbent on the tenant and their description
  8. Any defect or damage in the apartment that is known to the landlord and not immaterial, or any other item that might impede the tenant’s usage

 

What about repairs?

This is the issue that arises most often in Landlord Tenant disputes in my experience.

The Tenant must repair any damage caused by unreasonable usage in the apartment, unless otherwise agreed to by the parties.

The Landlord must repair within a reasonable time and no longer than 30 days any item that actually interferes with the Tenant’s usage of the apartment and is not minuscule and within 3 days if it is an emergency that reaosnably prevents the Tenant from normal usage of the apartment, unless the Tenant is responsible as stated above.

As an aside the law removed the previous requirement for “written” notice here.

If the Tenant demands repair of a defect or incompatibility that interferes with the Tenant’s usage and the Landlord didn’t carry out the repair within a reasonable time frame, the Tenant can perform the repair and demand reimbursement OR pay a lower rental amount that equals the defect has on the rental value.

At the end of the term the apartment has to be returned free of any occupants or any items that do not belong to the Landlord. The law did not add either “in the same state it was provided to the Tenant” nor “in the state it was received minus normal wear and tear” which is standard in most leases. Either way the Tenant will still have to repair any damage that is the Tenant’s responsibility.

Any clause limiting the Landlord’s responsibility for hidden defects is null if the Landlord knew or should have known about the defect at the time the contract was signed and did not inform the Tenant.

 

Extension and Termination options:

If the Landlord has an option to extend the term, the Landlord must give no less than 90 days’ notice to the Tenant and the terms for the Landlord’s extension must be detailed in the lease. This is very uncommon in standard leases.

If the Landlord does not have the option to extend the Landlord should notify the Tenant a reasonable time before the end of the lease term what the conditions would be to extend the lease term.

If the Tenant has the option to extend the Tenant should do so no later than 60 days before the end of the term. Keep in mind these conditions can be altered in favour of the Tenant but not in favour of the Landlord.

Any termination option for the Landlord must also be granted to the Tenant. The Landlord must give at least 90 days prior notice and the Tenant must give no less than 60 days.

 

Broker and Legal fees:

The Landlord pays for any costs the Landlord has undertaken to pay any third party, such as Landlord’s legal fees or brokerage fees if the broker acted on behalf of the Landlord. This line has caused much confusion even amongst attorneys and the media. The attorney for the Association of Realtors clarified that it only prevents a Landlord transferring to the Tenant the Landlord’s share in the brokerage fees that the Landlord undertook to payIt does not cover a brokerage fee legitimately agreed on between the broker and Tenant, even if the broker also represents and is paid by the Landlord.

 

Other payments incumbent upon the Tenant:

  • Utility bills – water, electric, gas, heating
  • Arnona
  • Monthly Vaad Bayit for ongoing maintenance – as opposed to any costs for building repair or capital improvements which the Landlord pays for

The Landlord pays structural insurance. The law is silent on the other insurance questions, see more on this in our general leasing article here.

 

Securities:

Any security provided in cash or its equivalent, such as a bank guarantee, is limited to three months’ rent or one third of the total rental, whichever is the lower sum.

The Landlord is only entitled to use the cash security for non payment of rent plus interest and linkage, failure to repair damage up to the cost of the repair, non-payment of ongoing bills up to the cost of the unpaid amounts or failure to vacate as per the lease terms. The Landlord must provide reasonable prior notice and allow the Tenant to cure the default before using the security.

At the end of the lease term the Landlord has 60 days to return the security, or until the Tenant’s debts are fully paid up, whichever is the later of the two.

 

Transfer of rights under the lease:

The Tenant is not allowed to assign the tenancy to another or sublet without the Landlord’s prior written consent, but the Landlord must only reject the Tenant’s request for reasonable cause or impose reasםnable conditions to the request. If the Landlord acts unreasonably the Tenant is entitled to go ahead with the assignment or sublet even without the Landlord’s consent.

The Landlord is allowed to sell or transfer the rights in the property, subject to the tenancy and as long as notification is first provided to the Tenant including the details of the purchaser. Similarly any claims the Tenant may have had against the Landlord will remain in force against any purchaser.

 

Other clauses:

The rent should be paid at the beginning of each rental period, unless the lease stipulates otherwise.

If the Tenant is allowed to stay on after the lease is up without an agreement on the length of a new term or if there is no term agreed upon, either party may end the term with reasonable notice.

The Tenant is not allowed to make changes in the apartment without getting the Landlord’s approval. This is usually included in most leases anyway.

If the Tenant makes changes with the Landlord’s consent the Tenant can choose whether to return the apartment at the end as it is or to undo the changes and return it as it originally was. The Tenant is not entitled to compensation for the changes. The presumption is though that the Landlord will usually condition consent on the Landlord’s preferred scenario.

The Tenant must allow the Landlord access at any reasonable time after reasonable notice to make repairs. It’s always recommended to request “prior co-ordination” and not just prior notice.

The Justice Minister is allowed to formulate a standard lease agreement that applies if there is no agreement or if the signed lease agreement does not cover certain items. I don’t believe this has been issued yet.

 

To sum up, you should always have your lease reviewed and try and include all necessary clauses as well but now most of your rights as a tenant are enshrined in the law and you have something to fall back on.

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