Land Parceling in Israeli Real Estate
Land parceling (parcelation) is a common procedure in Israeli real estate in which lots and land parcels are consolidated and redistributed to achieve accurate registration and to regulate ownership among the relevant parties.
This process is most often necessary when a discrepancy in the land records has been identified and the existing distribution is inaccurate or adversely affects property values. Parceling may also arise as the result of a partnership dissolution proceeding in which the court orders a partition in kind. In most cases, properly regulating land registration through parceling can significantly enhance the value of the assets for the property owner.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
The parceling process typically occurs when a specific lot has been designated for a development project or when a new outline plan has been approved that requires the creation of smaller sub-plots. While the procedure primarily benefits landowners by increasing property value, this is far from its only advantage.
When land is not properly registered in the owner’s name at the Land Registry (Tabu), the structures built on that land also cannot be registered as the owner’s property. Since the Tabu registration process can take years, such situations are not uncommon. Parceling effectively provides a shortcut: once the land is legally surveyed and registered, the owner can more easily obtain a mortgage, the property’s market value increases, and it becomes significantly easier to sell.
Parceling establishes legal certainty regarding both the property’s status and the owner’s rights. This is particularly important when a property is held jointly by multiple parties (co-ownership). The procedure is also valuable to banks and lending institutions, as Tabu registration enables them to accept the property as collateral and extend mortgage financing against it.
Land Registry Requirements for Parceling Registration
Before proceeding with the parceling procedure, several preliminary steps must be completed. First, pursuant to Section 137 of the Planning and Construction Law, a detailed plan must be submitted for approval to the local planning and construction committee, specifying the new boundaries of the sub-plots that will be created. The plan must also be approved by the Israel Mapping Authority. As part of the land registration application, the following documents must be presented to the Land Registrar: a signed application for land registration prepared by an attorney in accordance with the Land Registration Regulations; two copies of the proposed plan prepared and signed by a licensed surveyor; a general description of the land form signed by the Israel Mapping Center; and all applicable tax clearance certificates.
The Four Stages of the Parceling Process
The land parceling process consists of four main stages: first, the consolidation of all relevant land parcels into a single large area; second, the re-planning of the consolidated land for more accurate future distribution; third, the division of the land into sub-plots based on the number of owners and their proportional share of the property — with each owner entitled to a share reflecting the value of their previous holding; and fourth, the updating of the Tabu records with all new sub-plots under an orderly numbering system, while preserving the historical records of the prior division.
To complete the registration process, the following documents must be prepared: an up-to-date Tabu extract for the property (if available), a copy of the approved registration plan (the relevant outline plan), a copy and duplicate of the registration notice from the Israel Mapping Center, an application for the registration of long-term lessees (if any), a request for registration signed by the Israel Land Authority, all necessary registration documents, and approvals for the allocation of cautionary notes and encumbrances.
Voluntary vs. Involuntary Parceling
Voluntary parceling is the most common form. It is initiated by the landowner — often in cooperation with long-term lessees — and carried out at the owner’s own initiative. The procedure is governed by Chapter 4 of the Planning and Construction Law, 5725-1965.
However, not all landowners are interested in parceling, and in some cases the process may be involuntary. Involuntary parceling is initiated by the local authority when urban construction plans require land reorganization, or by individuals whose neighboring property owners are uncooperative. This may occur, among other circumstances, through urban renewal (pinui-binui) proceedings or government land expropriation. If you face an involuntary parceling situation or wish to file an objection, it is essential to seek legal advice from a real estate attorney who specializes in planning and construction law.
Regardless of whether the parceling is voluntary or involuntary, both procedures are conducted by an authorized surveyor acting on behalf of the local authority in coordination with the Israel Mapping Center.
Costs Associated With Land Parceling
The parceling procedure involves several costs borne by different parties. The process requires the services of multiple professionals — including a real estate appraiser, a lawyer specializing in real estate and property taxation, an authorized surveyor, and others — all of whom charge fees for their services. In addition, statutory fees and levies must be paid in accordance with the Real Estate Regulations (Fees), 5734-1974.
Registration fee: The property owner must pay NIS 134 for each sub-plot that is re-registered in the Land Registry at the time of registration — whether the sub-plot is created through a land division or canceled through a consolidation.
Capitalization fee: The Israel Land Authority charges a capitalization fee equivalent to 29.25 percent of the land’s assessed value.
Betterment levy: A tax payment equal to half of the property’s increase in value resulting from the parceling process, payable to the local planning and construction committee.
Purchase tax: A tax that may apply when the authorities classify the parceling as a real estate transaction — typically when the redistribution results in a change in the allocation of property rights among the co-owners.
Conclusion
Land parceling procedures can involve a lengthy approval and execution process. When parceling occurs involuntarily — through a merger or division without the owner’s consent — additional legal challenges arise that further complicate the proceedings. For professional legal advice on all matters related to land parceling, we invite you to contact Mor & Co. Law Firm.
The Real Estate, Planning, and Construction Department at Adv. Mor & Co. brings extensive experience in both real estate transactions and planning and construction proceedings. Our attorneys are committed to providing professional, results-driven legal support designed to achieve the most efficient and favorable outcome for every client. To discuss your real estate matter, contact us by phone at 02-595-3322, via WhatsApp at 050-441-1343, or through the online contact form below.
Section 137 — Registration of Land Division: Owners of land to which an approved plan applies — where that plan does not include a land division — may submit a parceling plan to the local committee for approval. The district committee shall not issue a building permit until a land division plan has been approved, or until the district committee has otherwise consented to the proposed division of the land.