A developer wants to buy the unused building rights on our Israeli building's roof. As an owner in Sydney, do I get a share?

The message from the house committee reads as if the decision has been made: a developer will add two floors, everyone signs, and each apartment receives a payment. An owner in Sydney who signs on that basis is giving away an asset without knowing whether it was theirs to give or whether the price reflects a share they are entitled to. The question of who owns unused building rights in an Israeli condominium is answered by the registered bylaw first and by the Land Law second.

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Detailed Answer

Building rights under an approved town plan attach to the plot, not to a particular apartment, so in a registered condominium they sit with the owners collectively as part of the common property in proportion to their registered shares. That is the starting position and it is the one most owners assume. What displaces it is the bylaw. Section 62(a) of the Land Law 5729-1969 provides that attaching a defined part of the common property to a specific apartment through the bylaw requires the consent of all the apartment owners, and Section 62(c) makes a registered agreed bylaw (takanon muskam) binding on anyone who becomes an owner afterwards. Israeli developers of the 1960s and 1970s routinely registered a bylaw at the outset attaching the roof, or the building rights, to the ground floor apartment or to the developer itself, and every purchaser since has bought subject to it without ever reading it. So the first document to obtain is not the developer's offer. It is the registered bylaw from the condominium register, together with the tabu extract showing your registered share.

Where the rights do belong to the owners collectively, exploiting them is a common property decision rather than a private one. Section 71 of the Land Law binds an absent owner to a resolution properly recorded in the resolutions book, which is the provision that catches owners abroad who never attended anything. Section 71B allows a defined majority to permit an extension using the common property, and Section 71C gives only thirty days to apply to the Supervisor of Land Registration against such a resolution. A sale of the rights outright to a developer, as opposed to permitting an extension, goes further and normally requires unanimity because it disposes of common property. The tax position is separate again and easy to overlook: consideration received for building rights is a disposal of a real property right for Israeli purposes, so betterment tax and the withholding mechanism apply, and an Australian resident then has the Australian side to report. Where the transaction is dressed as an urban renewal project rather than a straight sale of rights, the framework in our answer on TAMA 38 and urban renewal for a non-resident property owner is the one that governs.

An owner in Australia has one structural disadvantage and one real advantage. The disadvantage is service and time. Notices go to the Israeli address, resolutions are passed at meetings you did not attend, and the Section 71C window is thirty days from the resolution rather than from the day you found out. The advantage is that a sale of common property rights generally cannot proceed over your objection, which means your signature has a price. Use it to obtain the valuation rather than to hold out for its own sake: an independent Israeli valuer's opinion on the value of the unexercised rights, obtained before anyone signs, is what converts a flat per apartment offer into a share proportionate to your registered part in the common property.

In Practice: Section 62(a) of the Land Law 5729-1969 requires the consent of every apartment owner to attach common property to one apartment through the bylaw, and Section 62(c) binds later purchasers to a registered agreed takanon, which is why a roof clause from 1968 still governs today. Section 71C allows only 30 days to apply to the Supervisor of Land Registration (Mefake'ach al Rishum Mekarke'in) against a resolution, and a contested application before the Supervisor typically produces a decision in 2 to 4 months. A copy of the registered bylaw and the condominium file costs a nominal registry fee and arrives within about 2 weeks, while an independent valuation of unexercised building rights on a mid-size Tel Aviv block runs NIS 6,000 to NIS 15,000 against per apartment consideration that commonly reaches NIS 150,000 to NIS 500,000.

When to Consult a Lawyer

• The developer's agreement is presented as a single document for all owners to sign, because a sale of common property rights and a permission to build on it are legally different transactions with different majority requirements and different tax consequences.
• The bylaw appears to attach the roof to another apartment, since the question then becomes whether that attachment carried the building rights with it, which is a construction argument worth having before you accept that you own nothing.
• You have already been told a resolution was passed, given that the Section 71C clock runs from the resolution and an owner abroad who waits to take advice usually loses the right to challenge it.

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Speak With an Israeli Attorney

We pull the registered bylaw and the condominium file, tell you whether the building rights are yours before you negotiate over them, obtain an independent valuation, and structure the consideration so the Israeli betterment tax and withholding are dealt with before the money moves to Australia.

Contact us for a confidential initial consultation.