The authorities are expropriating land I inherited in Israel. What compensation am I entitled to?

Expropriation notices are published in Reshumot and posted on the land. Neither reaches a family in Buenos Aires or Manchester. The first many heirs hear of it is a neighbour's phone call, or a survey stake in a field, or a lawyer's search years later showing that a strip of the plot is gone. By then the arguments that were available at the start have usually narrowed to one: how much, and to whom.

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Detailed Answer

Israel takes land for public purposes down two tracks and the compensation rules differ. The older track is the Land Ordinance (Acquisition for Public Purposes) 1943, under which the acquiring authority publishes notices and, on publication of the vesting notice, becomes entitled under Section 19 to have the land registered in its name free of other rights; the proportion that may be taken without compensation there runs up to 25%. The more common modern track is the Planning and Building Law 5725-1965, where the taking is carried out by a local planning authority under an approved plan. Section 190(a)(1) allows up to 40% of a plot to be expropriated without payment where the land is designated for public gardens, recreation and sport areas, or for buildings serving education, culture, religion or health, and where more than 40% is taken, full compensation is payable on the portion above that threshold. The 40% figure is not a licence to take four tenths of every plot for nothing. Where a very large proportion is expropriated and the remainder is itself damaged, the courts have required compensation on the first 40% as well, and that argument is the one most often worth running on inherited land, because the plots involved are frequently small and what is left over is frequently unbuildable.

The obstacle that actually costs foreign heirs money is registration, not valuation. Compensation is paid to the registered owner, and a very large share of inherited Israeli land is still registered in the name of a grandparent who died decades ago. Until an Israeli succession order or a probate order recognising a foreign will has been obtained and the transfer registered at the Land Registry and Settlement of Rights Authority, the authority has nobody to pay, and money can sit unclaimed for years while the deadlines attaching to the compensation claim run in the background. Start with the cheap step: an online nesach tabu extract costs about NIS 15 and tells you who is registered and whether an expropriation note has been entered against the parcel. Everything else follows from that answer. If the family is registered, the fight is a valuation fight, run with an Israeli appraiser (shamai mekarke'in) whose opinion is the actual currency of the negotiation, and it can be conducted entirely from abroad under a notarised and apostilled power of attorney. If the family is not registered, the succession work has to be done first and in parallel, not after the compensation question is settled. One further point that catches non-residents: compensation for expropriated land is not automatically tax-free, so the receipt has to be reported and its treatment under the Real Estate Taxation Law considered before the money is distributed among heirs in different countries.

In Practice: Under Section 190(a)(1) of the Planning and Building Law 5725-1965 a local planning authority may expropriate up to 40% of a plot without compensation for public gardens, recreation and sport, or education, culture, religion and health buildings, with full compensation on any excess above 40%; under the Land Ordinance (Acquisition for Public Purposes) 1943 the uncompensated proportion is up to 25%, and on publication of the vesting notice the authority is entitled under Section 19 to be registered as owner free of competing rights. Confirm the position first with a nesach tabu extract from the Land Registry and Settlement of Rights Authority costing about NIS 15. Where an inheritance is unregistered, obtaining an Israeli succession order and completing the transfer commonly adds 6 to 12 months before the authority has anyone it can pay.

When to Consult a Lawyer

• The plot is still registered to a deceased relative. The compensation cannot be paid to you until the succession chain is registered, and the expropriation timetable will not wait while the probate is arranged from abroad.
• More than 40% of the plot is being taken, or the remainder is left unusable. That is precisely the situation in which compensation on the first 40% has been ordered, and the argument depends on appraisal evidence prepared early rather than on objecting after the vesting notice.
• The taking is under a planning scheme you were never told about. Objection rights and compensation rights under a plan run on their own deadlines, and a foreign address in the register is not a defence to having missed them. Our answer on the Israeli municipal development levy for a non-resident owner covers the charge that often arrives alongside a scheme.

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Speak With an Israeli Attorney

Expropriation compensation is decided by an appraiser's report and by who is on the register, and a family abroad usually has work to do on the second of those before the first is worth commissioning.

Contact us for a confidential initial consultation.