Residential Lease Agreements in Israel: What to Check
A lease is usually signed in a hurry, between two parties neither of whom is represented. The Fair Rental Law sets a floor that cannot be contracted out of to the tenant detriment, and above that floor a wide space remains that the agreement has to close. This guide covers both.
What the law provides anyway
One of the most common mistakes property owners make is using a generic lease template downloaded from the internet, a one-size-fits-all text that does not go into detail, does not spell out the obligations of tenant and landlord, and therefore protects neither side. Israeli law does not prescribe a mandatory form of lease, so the real protection is a detailed, well-drafted agreement: when most situations are settled in advance, every question or disagreement can be referred to the contract instead of turning into an argument. But before the details, it is worth knowing what the law provides even when nothing is written.
In 2017 a chapter on residential tenancies was added to the Hire and Loan Law, 5731-1971. Its provisions are a floor: they cannot be contracted out of to the tenant detriment, even where the agreement says otherwise.
A dwelling fit for residence. The Law sets minimum conditions without which a dwelling may not be let for residence, including a working drainage and sewage system, an electricity or lighting system, openings for ventilation and natural light, doors and windows that can be locked, a water supply system, a partition between the lavatory and the rest of the dwelling, and the absence of unreasonable risk to the tenant health or safety.
Repair of defects. A defect that is not urgent is repaired within 30 days of the tenant request. A defect that prevents reasonable use of the dwelling is repaired within three days.
Not every tenancy falls within this chapter. The Law excludes, among others, tenancies shorter than three months, tenancies longer than ten years, student dormitories and sheltered housing, and luxury apartments where the rent exceeds the prescribed amount. It is worth establishing that the chapter applies before relying on it.
The basic details
It sounds obvious, and it is exactly what gets left out. The agreement should carry the full identity of the parties and their identity numbers, a description of the property including block and parcel numbers, floor and area, and what the tenancy includes: a storeroom, a parking space, a balcony, furniture.
It also needs the term with precise start and end dates, and an option to extend if one was agreed: who may exercise it, by when notice must be given, and what the rent will be in the extended period. An option with no mechanism for setting the rent is a well known source of dispute.
A handover protocol is worth attaching, with photographs and with the electricity and water meter readings on the day of entry. It is the only document that will later allow reasonable wear to be told apart from damage.
It is also important to spell out any grace periods, if granted, and the full consequences of non-payment of rent or of payment made after the grace period has passed. The agreement should likewise state in advance in which situations either party may exit the lease before its term ends, and at what price.
Payments and securities
The agreement should set the rent, the payment date and any indexation. Alongside them it should set out who bears each payment. The Law default is that the tenant bears the running payments arising from his use of the dwelling, such as municipal rates, electricity, water, gas and building committee fees, while the landlord bears payments relating to the property itself, such as building insurance and payments for improvements to the building.
Securities. The Law caps the total securities a landlord may require, including a deposit, a bank guarantee, a promissory note and a personal guarantee. The ceiling is the lower of three months rent, or one third of the total rent for the whole term. It is equally important to state expressly when and on what conditions the landlord may call on the security, and when it is returned.
When setting the amount of the deposit, within the statutory cap, the value of any furniture and equipment rented with the property and potential repair costs may also be taken into account. The agreement should also state clearly at what stage after the tenant vacates the deposit is returned.
Who actually uses the property
A point that tends to be skipped. The agreement should state who may live in the dwelling, whether additional occupants may be brought in, and whether subletting is permitted. Without that, a landlord can discover after the fact that the dwelling has been let on, or is being used for something other than what it was let for.
The related question is the purpose of the tenancy. A dwelling let for residence but used in practice for a business, for short stay hosting or for storage can put the landlord in breach with the building committee, the local authority and the insurer. One sentence in the agreement, stating that the property will serve for the residence of the tenant and his family alone, prevents most of these disputes.
Subletting. If at some point the tenant wishes to rent the apartment on, to a friend or to a stranger, the agreement should provide that this requires the landlord’s prior written consent, so that every request is examined on its merits. And where a replacement tenant is agreed on, it is usually better to end the original tenancy and sign a fresh lease with the incoming tenant, including new securities and new guarantors. Trying to enforce the original lease against an occupant who was never a party to it is a complicated exercise that can put the investment in the property at risk.
Additional occupants and long-term guests. Tenants’ lives are dynamic: a partner, a sibling or another family member may move in. More people mean faster wear and tear, higher utility bills and more potential for disputes. The agreement can set a clear policy on long-term guests, for example how many consecutive nights, or how many nights in total over a given period, a guest may stay. The landlord cannot track comings and goings, but an extra car parked permanently at the property or a marked, sustained rise in water and electricity use can indicate an additional occupant.
Pets. Many tenants have pets. If the landlord allows them, it is worth setting out a clear pet policy or attaching a separate annex to protect the property from damage. If the agreement prohibits them, it should make clear that keeping a pet in breach of it is a fundamental breach. And where a dog of a dangerous breed is concerned, its owner must comply with the Regulation of Supervision of Dogs Law 5763-2002 and carry a suitable insurance policy, one that protects the landlord as well.
Repairs and care of the property
The central distinction is between reasonable wear, which is the landlord responsibility, and damage caused in use, which is the tenant. The agreement has to turn that distinction into practice: who repairs what, who calls the tradesman, and within what time.
Beyond that it should say whether the tenant may make alterations, which ones, and what happens at the end of the tenancy: whether the alteration is removed or stays. It is also worth regulating the landlord visits to the dwelling, on reasonable advance notice and without intruding on the tenant privacy.
The agreement should state expressly that the tenant will look after the property, comply with noise rules and not change the locks without the landlord’s written consent. It is advisable to attach an inventory list of the appliances and furniture rented with the apartment, noting their condition, together with a full allocation of responsibility for the bills: building committee, sewerage, water, electricity, gas, telephone, television and internet, who pays what. If times for the landlord’s visits have been agreed, they too should be set out.
Known defects. A landlord must disclose to the tenant every defect in the property that the landlord knows of or ought to have known of. A landlord who fails to do so is exposed to a claim in tort and to an allegation of breach. The right course is to record the known defects in the agreement itself or, better still, to repair them before letting.
Two policies, not one. Building insurance is the landlord and covers the property. Contents and third party insurance is the tenant and covers his possessions and damage he causes. An agreement that does not distinguish between them leaves both sides exposed.
End of the tenancy and vacating
The agreement should state exactly what is required on the day of vacating: return of the keys, the condition of the dwelling, cleaning, and settlement of all running accounts. A vacating protocol compared against the handover protocol is worth agreeing, along with a mechanism for returning the securities once the accounts have been checked.
Breach and remedies also need covering: what counts as a fundamental breach, how much notice the landlord must give before cancelling, and the agreed damages for late vacating. A reasonable agreed sum is an effective tool. An excessive one can be struck down by the court, so overstating it does not serve the landlord.
It is worth stating expressly that the lease ends at the end of the term if the tenant has not given notice exercising the option, and that on vacating day the property is returned clean and empty, as it was handed over. Many tenants leave belongings behind, so the agreement should provide that anything left in the property is deemed abandoned property which the landlord may remove.
And if the tenant does not vacate? Evicting a tenant requires legal proceedings, and self-help is prohibited. The proper route runs through an orderly notice of the breach followed, where necessary, by an eviction claim. Acting unilaterally against the tenant can turn the landlord from the injured party into the party in breach.
Before you sign, talk to us. Our office drafts the agreement for you, conducts the negotiation and represents you through to completion of registration. Our real estate department has accompanied transactions for over 15 years, alongside an architect, a surveyor and a property valuer. Call 02-5953322, send a WhatsApp message to 050-4411343 or leave your details in the form below, and we will get back to you as soon as possible.
What people ask most often
The landlord refuses to repair a defect. What is the position?
How much security may I be asked for?
We signed an agreement that conflicts with the Law. Which prevails?
The tenant is not vacating on time. What can be done?
Who pays rates, building fees and insurance?
What is the difference between a protected tenancy and a free-market tenancy?
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Before you sign a lease
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