Income-producing assets and commercial leasing — lease, use, and management agreements
Cash flow lives in the documents.
An income-producing asset looks like walls, but it is really a bundle of agreements. Who fixes a fault, who pays the municipal taxes, what happens when a tenant walks out mid-term, and what happens when you buy a tenanted building and the previous owner's contracts travel with it. The risk here does not detonate on signing day; it detonates three years later. We read that layer before it costs money.
Two sides of the same contract — the landlord's and the tenant's.
Income-producing assets
An income-producing asset is measured in cash flow, and that cash flow rests entirely on documents. The lease decides who pays what, who carries a fault, and what happens when a tenant walks out mid-term. In this type of deal the risk does not detonate on signing day but three years later, when it turns out one clause never covered a situation that actually occurred. We treat that layer as part of the asset's infrastructure.
What we do
- Review the existing contractual position before acquisition, including leases that need no registration under s. 79.
- Draft lease, use, and management agreements with a clear split of responsibility and operation.
- Put tenant security in place, with enforcement mechanisms that work once the tenant stops paying.
- Allocate municipal taxes and charges according to who actually holds the property.
- Handle escalation, extension options and notice dates, so an option does not accidentally push the lease past the s. 79 threshold.
- Support tenant turnover, assignment of rights, and sale of the asset while occupied.
Where deals stall
An asset whose cash flow rests on documents that were actually checked, and on security that can be enforced rather than merely pointed at.
Office leasing
An office lease for a company is a long-term deal dressed as a rental contract. The company invests in build-out, fixes its headquarters, and sometimes commits for longer than its own business planning cycle. The other side is leasing out an asset and wants it back in a defined condition. Most disputes in this field are born in exactly those two places: what may be built inside, and what happens to it at the end.
What we do
- Draft long-term leases with exit, extension, and assignment mechanisms that fit the company's plan.
- Settle the build-out: who builds, who funds, who owns it at the end, and what is restored.
- Allocate municipal taxes and charges according to who actually holds the property.
- Check that the intended use matches the permit and the zoning before entry, including ancillary uses.
- Handle options and notice dates so the structure stays within s. 79 of the Land Law.
- Support subletting, floor splits and expansion into additional space in the same building.
Where deals stall
A lease that matches the company's business horizon, with build-out, options, and exit defined in advance.
What we get asked about income-producing assets
Does a commercial lease have to be registered at the Land Registry?
It depends on the term. The Land Law exempts a short lease — one not exceeding five years — from registration (s. 79). Beyond five years it is a chakhira (long lease), and beyond twenty-five years a chakhira le-dorot, a perpetual-style leasehold (s. 3). Above that threshold, an unregistered lease exists against the landlord but does not appear where a buyer or a bank actually looks.
Can an extension option turn the lease into a registrable interest?
Yes, and it usually happens by accident. Section 79 of the Land Law removes from the exemption a lease carrying an option to extend it to a total period exceeding five years, and a lease commencing after five years from the date of the agreement. Three years plus two two-year options is not a "short lease" — it is a different document, and that is where a good many commercial deals come apart.
I bought a building with tenants in it. Do their leases bind me?
Yes. Section 21(b) of the Hire and Loan Law provides that a person who acquires the landlord's right steps into their shoes as to the rights and obligations under the lease, even if that person did not know the lease existed. The section also preserves for the tenant the claims they held against the previous landlord. Reviewing the contract stack is therefore part of the asset diligence, not an annex to it.
The tenant is funding the build-out. Who owns it at the end of the term?
The agreement decides, and beneath it sits the statutory default. Section 16A of the Hire and Loan Law provides that a tenant may not make alterations to the premises without the landlord's consent. Section 20A provides that where alterations were made with consent, the tenant chooses between returning the premises as they stand after the alterations — in which case no payment is due for them — and restoring the premises to their previous state. In an office lease that is a significant budget line, so it gets settled in writing in advance.
The tenant wants to assign the lease to another company. Can we refuse?
Not on any terms you like. Section 22 of the Hire and Loan Law makes assignment and subletting conditional on the landlord's consent, but provides that where consent was refused on unreasonable grounds, or made subject to unreasonable conditions, in a lease of land the tenant may proceed without that consent, and the court may permit the transaction on such terms as it sees fit. The section also requires that consent in a lease of land be given in advance and in writing.
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