What happens to a damaged building, and who decides the law applies?
Israel's War Damage Rehabilitation Through Urban Renewal Law, 5786-2026 (the Rehabilitation Law) lets the government designate a rehabilitation and renewal area by order, and from that moment the area also counts as a designated pinui-binui complex (section 9), rebuilt as a single project. Pinui-binui is Israel's evacuate-and-rebuild track. The starting point is a destroyed building: one that suffered war damage as the Property Tax and Compensation Fund Law, 5721-1961, defines it, and that the city engineer has ruled destroyed, or in need of demolition, because of that damage (section 2(a)). The government designates an area only on the recommendation of an interagency advisory panel chaired by the director of the Planning Administration, Israel's national planning agency, and only if it finds that advancing or carrying out a renewal project in the area is justified (section 3(a)). It can also designate an area with no destroyed building, if 3 conditions are all met: the area has at least 3 buildings with at least 12 apartments between them; the city engineer and an engineer acting for the Israel Tax Authority's Compensation Fund, which pays for war damage to homes, have found significant war damage that will take a long time to repair; and the project is justified here too (section 3(b)).
The designation has to come within 60 business days of the day the building was hit. The panel's chair can extend that by up to 10 business days, and the Finance Minister, by order and in special circumstances, can extend it by up to 45 business days in total, the chair's extension included (section 6). For buildings hit between June 13, 2025, and the law's effective date, the clock starts on the effective date. And the law is not tied to a single event: future war damage can also lead to a designation.
From the designation order on, 4 numbers matter:
Bottom line: designation is a government decision, and it starts a clock. From the order on, every deadline runs in business days, so the designation date is the first thing you write down.
A new apartment or a cash buyout: what's the difference?
In a rehabilitation deal you move back into a new apartment in the rebuilt building. In a buyout you sell your rights and leave with cash. Both contracts are signed with a developer; the one the director of Israel's Government Authority for Urban Renewal (the state agency that runs renewal policy) approves for the area is called the rehabilitation developer. In a rehabilitation deal, you sell your rights so that a new building can go up, or the existing one can be expanded, and you receive an apartment in it. In a buyout, you sell all your rights in the apartment for cash.
Every developer has to offer every owner who can reasonably be located both options: a rehabilitation deal and an enhanced buyout (section 37). Both count toward the same special majority that the rehabilitation developer's approval rests on (section 40(a)).
| Moving back: a rehabilitation deal | Selling: a buyout | |
|---|---|---|
| What you get | An apartment in the new building that replaces your old one | A cash payment for all your rights in the apartment |
| What sets the price | The contract, which must set out the principles of what you receive (section 2(a)) | The government appraisal: a comparable new apartment in the same area, as of the day before the building was hit; within 95 business days of designation, the enhanced appraisal (sections 33, 38(a)) |
| Your Compensation Fund payment | The apartment, plus rent until you receive it, counts as that payment (section 53(c)(1)) | The buyout payment counts as that payment (section 53(c)(2)) |
| Rent in the meantime | Only if the Fund's director has deferred your payment: fair rental value, in an amount the director sets, and never after the land is handed over for construction (section 53(b)) | Only if the Fund's director has deferred your payment: fair rental value, in an amount the director sets, and never after the land is handed over for construction (section 53(b)) |
| When you receive it | By the maximum deadlines the contract has to set (section 2(a)) | Within 90 calendar days of the later of the developer's approval and the plan's deposit for public review; the Fund's director can extend that deadline, and you can ask to postpone until move-out (section 44) |
| Tax | Under the law's tax chapter (section 50) | Exempt from appreciation tax if you buy a replacement home worth at least 75% of the sale price within 12 months of the developer's purchase (section 51(a)) |
Bottom line: both options start from the same place, a new apartment. Move back and you get an apartment in the building; sell and you get cash based on the value of a comparable new one.
How does the government appraiser value your apartment?
As a comparable new apartment in the same area, not as whatever is left of the building. The Chief Government Appraiser, or an appraiser acting on that office's behalf, appraises every apartment in the area within 35 business days of the designation, after reviewing any details you send in the first 15 business days after designation, and sends you the appraisal within 40 business days of the designation (section 33(a) and (d)).
The benchmark is a new apartment in the same area that is similar to yours, including in size, with floor area measured under section 3 of the Sale (Apartments) Law. The valuation date is the day before the damage, and the appraisal cannot come in below what a willing buyer would have paid a willing seller for your apartment just before the damage (section 33(b)).
If you sign an enhanced buyout, you get a second appraisal, calculated as if your apartment were larger by a third of the extra floor area set by the local planning committee's policy for owners in renewal projects, or by 4 square meters (about 43 square feet) of main-use space where the committee has no such policy. For an apartment far out of line with a typical one in the area, the appraiser may reduce the addition (section 33(c)). The added area exists only in the calculation, not in the apartment.
Disagree with the appraisal? You can file an objection with the objections committee within 75 business days of the designation (section 34). The count runs from the designation, not from the day the appraisal arrives, so read it the day it comes.
Bottom line: the appraisal is based on a comparable new apartment in the same area, as of the day before the building was hit. The deadline to object runs from the designation.
Can you get a new apartment and still be paid for the war damage?
Not for the same damage. In a designated area, an owner who receives what a rehabilitation deal provides, or the payment under a buyout, is treated as having already received the war-damage payment the Compensation Fund would otherwise make under its regulations. Under a rehabilitation deal, what you receive is an apartment in the new building plus rent until it is handed over. The rule covers war damage from June 13, 2025, on (section 53(c)–(d)).
"Where an injured party has received any of the following, it shall be deemed that the compensation to which that party is entitled for the war damage under the [Compensation Fund] regulations has been paid: …" — War Damage Rehabilitation Through Urban Renewal Law, 5786-2026, section 53(c) (unofficial translation)
What about rent? In a designated area, the director of the Compensation Fund may defer paying for the damage to the apartment, weighing the cost of repairing the damage to the building against the cost of financing alternative housing, and whether the damage can be repaired. If the director defers, you are entitled to fair rental value, in an amount the director sets, until you receive what the deal or the buyout provides, or the Fund's payment itself. Rent stops once the land is handed to the rehabilitation developer for construction to begin (section 53(a)–(b)).
Bottom line: what the project gives you comes instead of the Compensation Fund payment, not on top of it. Rent in the meantime depends on the director deciding to defer that payment.
What majority does it take, and what happens to owners who haven't decided?
The decision is made by a special majority, not by every owner signing. What you control is the terms. The law sets 2 ways to reach the special majority of apartment owners. The first: a majority of the apartment owners in the area, who together hold a majority of the apartments in each of more than half the buildings in the area, provided every building included under section 4(2) is among them. The second: owners of at least 80% of all apartments in the area. An empty lot counts as one apartment (section 2(a)).
Under the regular Pinui-Binui Law track, the required majority is set differently. The special majority described here applies only in an area designated under the Rehabilitation Law.
Within 30 business days of its approval, the rehabilitation developer has to offer owners who haven't signed by then a rehabilitation deal or a buyout, with the buyout priced at the regular appraisal, without the added area. An owner who signed with a different developer before the submission period closed, 95 business days from designation, and whose deal was reported as the law requires, gets the enhanced price (section 43(a)(3)).
Once a plan for the area has been submitted, the rehabilitation developer may file suit in the district court against an owner who turned the offer down. Where the need for fast, efficient, and optimal rebuilding of the area justifies it, the court may, but does not have to, order the owner to sign, and may even appoint a lawyer or an accountant to sign on the owner's behalf (section 48(a)–(c)). The court weighs the circumstances, including whether the owner was offered a rehabilitation deal and a buyout on time, whether alternative housing adapted for a person with a disability was offered, and what was offered to an older owner who lived in the apartment (section 48(d)).
If no rehabilitation developer has been approved at the end of 110 business days from the designation, the designation lapses and the law no longer applies to the area (section 41).
Bottom line: once there is a special majority, one owner cannot stop the project. An owner still has a say in 3 places: the appraisal, the choice between the two options, and the terms of the contract.
Already signed a pinui-binui or TAMA 38 deal before the damage?
The deal stands, and it also counts as a rehabilitation deal. A pinui-binui deal, or a deal under a building-strengthening plan such as TAMA 38, signed before the designation while the apartment had not yet been vacated, is treated as a rehabilitation deal. Within 50 business days of the designation, the developer or the owner may cancel it by written notice. An owner may cancel only to sign an enhanced buyout with the same developer. An agreement with an organizer (the person or company that signs owners up for a renewal project) can be canceled in the same window (section 36).
In the area itself, 3 more things change. The municipal levy on the increase in land value from the rehabilitation plan is a quarter of that increase, and the municipality may set it at half or waive it, under the conditions the section sets and within 30 business days of the damage or of the law taking effect, whichever is later (section 30). For 60 business days from designation, or until the planning body sets conditions, whichever comes first, no building permits, land-use permits, or subdivision approvals are issued in the area (section 14). And if the municipality misses the timeline for submitting the plan, planning moves to the national fast-track housing committee (section 16).
Bottom line: a contract signed before the damage stays in force. The window to leave it is 50 business days, and it runs one way only: an enhanced buyout with the same developer.
6 steps from the day of designation
As of September 2026, the Planning Administration's website lists rehabilitation areas designated in Arad, Dimona, Rehovot, Tel Aviv, Ramat Gan, Bnei Brak, Haifa, and Bat Yam.
- 1Check whether your area has been designated. The notice is posted on the Planning Administration's website, and within 3 business days the municipality posts it on a sign in the area and on its own website. If it has your email address or cell number, it is supposed to notify you directly (sections 7–8). Every other deadline runs from that date.
- 2Within 15 business days, send the appraiser your details. Floor area, renovations, anything not visible from outside. The municipality's notice explains how to submit them (section 8).
- 3By business day 40, the appraisal arrives. Read it against your records. Compare it with the Land Registry (Tabu) extract and the building permit: the floor area should match the section 3 measurement, and the comparison apartment should actually resemble yours.
- 4You have until business day 75 to file an objection with the objections committee (section 34).
- 5Business day 95 closes the window for an enhanced buyout. A rehabilitation deal can still be signed later (section 43(a)(3)).
- 6Before signing a rehabilitation deal, check that the contract sets out the principles of what you receive, maximum deadlines, details of who will do the work, and guarantees (section 2(a)).
What to verify before you sign
Your questions, answered
Our building was hit and the area hasn't been designated yet — who decides, and by when?
The government decides, on the advisory panel's recommendation, within 60 business days of the damage. The panel is chaired by the director of the Planning Administration and includes the director of the Compensation Fund, the Chief Government Appraiser, and the mayor (section 10). It reviews the area and makes a recommendation, which the government approves as a whole or rejects (section 3(c)). The panel's chair can extend that deadline by up to 10 business days, and the Finance Minister, by order and in special circumstances, can extend it by up to 45 business days in total, the chair's extension included (section 6).
Before recommending, the Planning Administration publishes notice of the proposed recommendation at least 21 business days in advance. Anyone who considers themselves affected by it may submit written comments within 14 business days of the last publication, and the panel considers and decides on them (sections 11–12). In the meantime, follow the Planning Administration's page of areas under review. The time to comment is before the area is designated.
Our building wasn't destroyed, but it's inside the area. How is that possible?
The law lets an area include buildings that were not destroyed, under certain conditions. A damaged building that is not destroyed is included if the panel finds that demolishing it is justified (section 4(1)). Any other building, undamaged or damaged with no case for demolition, is included only if the regional planner finds a clear planning need for it, which requires that there be no planning solution without it, and only up to 25% of the buildings in the area (section 4(2)). Where the area also includes an empty lot, the lots included this way cannot together exceed 40% of the area (section 4(3)).
A building included under section 4(2) also matters for the majority: the first route to the special majority works only if that building is also among those with a majority (section 2(a)). Its apartments are appraised like every other apartment in the area, and its owners receive both offers. Whether a building that was not destroyed is included depends on a finding by the panel and the regional planner.
The Compensation Fund is paying our rent — what happens when we sign?
Under the Rehabilitation Law, fair rental value is paid only if the director of the Compensation Fund has deferred your payment, and only until you receive what the project provides or the compensation itself. It is not paid after the land is handed to the rehabilitation developer for construction (section 53(b)).
What the project provides counts as your war-damage payment (section 53(c)). To find out whether your payment was deferred, and from what date, gather everything the Compensation Fund has sent you about the apartment: letters, decisions, and payments. Before you sign, know what the Fund has already decided about the apartment.
I'm 75 and live in the damaged apartment — do I have special protection?
The law does not give you a right to refuse, but the court takes age into account. That protection becomes relevant if the rehabilitation developer sues an owner who turned down the offer, and the district court weighs the circumstances. For an owner who lived in the apartment on the day of the damage and was 70 or older that day according to the Population Registry, the court looks at whether at least one of the alternatives the law lists was offered, on top of the rehabilitation deal and the buyout. For an owner who was 75 or older on the day of the damage, or who meets the section's other conditions, the court also weighs whether the owner was offered the specific choice of alternatives in section 48(d)(9)(a), on top of a replacement apartment (section 48(d)(10)).
If those alternatives were not offered, the court may set conditions that must be met before it grants the order (section 48(e)). Start now: keep a certificate from the Population Registry and any document showing you lived in the apartment on the day of the damage. Your age, and whether you lived in the apartment, are both determined as of the day of the damage.
Does the state put up the money the developer pays us?
The state can help the developer, not the owner. A rehabilitation developer that has committed to buy owners' rights under buyouts may apply for financing assistance from the Fund, on the conditions and repayment terms the law sets (section 45). Where needed, the Fund also finances a share of a project that is not economically viable, based on an economic review by the director of the Urban Renewal Authority, up to the cost of repairing the damage (section 46).
A developer seeking that assistance needs the approval of the Fund's director, under guidelines the Israel Tax Authority has published, which include experience and equity requirements. For your part, check the contract for who pays, when, and what backs the payment if it is late. The payment to you remains the developer's obligation under the contract.
What does your appraisal say about each option?
Beyond personal preference, the choice between moving back and selling turns on 2 documents: the appraisal you received and the contract in front of you. The Gottlib firm, an Israeli real estate practice, represents apartment owners and owners' committees in areas designated for rehabilitation: we read the appraisal with you, negotiate the rehabilitation deal or the buyout with the developer, and stay with you until the apartment or the payment is handed over.
Message us on WhatsApp with a photo of the appraisal from the government appraiser, or of the designation notice if the appraisal hasn't arrived yet, and we'll tell you where you stand on the timeline and what the appraisal says about each option.
Your appraisal is based on a comparable new apartment in the same area, as of the day before the building was hit, not on what is left of the building. Read it before you choose between the two options — and close with confidence.
Sources: the War Damage Rehabilitation Through Urban Renewal Law, 5786-2026 (Book of Laws No. 3521, April 5, 2026, p. 498) — sections 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 14, 16, 30, 33, 34, 36, 37, 38, 40, 41, 43, 44, 45, 46, 48, 50, 51, 53; correction published May 4, 2026 (Book of Laws No. 3525, p. 563); the Property Tax and Compensation Fund Law, 5721-1961 (by reference); the Israel Tax Authority's guidelines under section 45 of the Rehabilitation Law; the Planning Administration's website — designated areas and areas under review. Current versions verified on September 15, 2026. The above is general information only, not legal advice or a substitute for it; consult a lawyer before acting.
General information — not legal advice.