Residential lease agreements — deposits, repairs, and the terms you cannot contract out of
The statute already answered.
Since the 2017 amendment, Israeli law carries a whole chapter dealing only with residential tenancies, and it fixes things the parties cannot change by contract: what counts as a dwelling fit for habitation, how large a deposit may be demanded, and how quickly repairs must be carried out. Most of the disputes we see begin with someone who did not know the chapter existed. We draft the agreement out of it, not alongside it.
What the statute already settled, and what is left for you to draft.
Residential tenancies
Most rental disputes are not born of bad faith. They are born of a clause nobody wrote. Who fixes the burst water heater, what happens when a tenant leaves mid-term, what may actually be deducted from the deposit. In residential rentals the law has already fixed some of the answers and they cannot be contracted out of; in commercial leases and long-term leaseholds everything rests on the contract. We write it so both sides know in advance what happens on the day something goes wrong.
What we do
- Separating what the law already mandates in residential rentals and cannot be waived, from what is genuinely open to negotiation.
- Building a security that fits the deal — bank guarantee, promissory note or guarantors — and defining precisely when and how each may be called.
- Allocating maintenance: what counts as fair wear and tear, who repairs, and on what timetable.
- Exit mechanics: breach, eviction, substitute tenants — drafted in advance, not improvised during the fight.
Where deals stall
An agreement you can pull out of the drawer when there is a dispute and find an answer in — not an argument.
Commercial, office, and income-property leasing: the dedicated page
Institutional and build-to-rent leasing
When the landlord is a fund, an insurer, or a company that built an entire building to rent it out, the lease stops being a contract and becomes a business model: hundreds of apartments, one standard lease, a management operation, and a tax track under Chapter 7-1 of the Encouragement of Capital Investments Law that trades benefits for a long-term rental commitment. All of it rests on three documents that have to agree with each other: the lease, the management agreement, and the approval for the benefits track. We draft them as one system, not three files.
What we do
- Draft one standard lease for hundreds of units out of the residential-tenancy chapter of the Hire and Loan Law: deposit, repairs, and charges set by what cannot be contracted out of, so one clause doesn’t come back two hundred times.
- Match the rental commitment to the benefits track: how many units, for how many years, and what gets reported, so the business model and the tax filing say the same thing.
- Draft the management agreement against the lease: who repairs within the statutory deadlines, who collects, who reports.
- Represent buyers of an occupied building as the continuing landlord. The prior landlord’s rights and obligations travel with the building (s. 21(b) of the Hire and Loan Law), so the contract stack is part of the building’s price.
- Arrange the financing and mortgage of a rental building with the lender: the lender’s collateral alongside the commitments that earn the benefit.
- Represent bidders in long-term rental land tenders: the tender terms, the rent caps, and what may be done with the building once the commitment period ends.
Where deals stall
A building leased as a system: one lease that holds hundreds of units, management that knows who does what, and tax benefits with the commitment behind them on record.
Long-term leases and ground leases
A long-term lease, what an American developer would call a ground lease, is a tenancy measured in decades: a lot for a gas station or a logistics hub, land owned by an institution or a family and leased to a developer who will build on it, an entire building handed to an operator for twenty-five years. Past five years Israeli law already calls it a leasehold; past twenty-five, a generational leasehold, a right recorded at the Land Registry (Tabu) and treated by the tax authority as a sale. The difference is decided in the drafting: what gets recorded, what counts toward the term, and what happens to the building the day the lease ends. We write it on day one.
What we do
- Set the type of right by the real term, options included: s. 3 of the Land Law defines a leasehold as over five years and a generational leasehold as over twenty-five, and s. 79 exempts from registration only a lease of five years or less.
- Record the leasehold at the Land Registry, with a caution note (the registry’s protective notation) until recording, so the right exists against a buyer or a lender and not only against the owner.
- Plan the tax before signing: a lease whose maximum term, extension options included, exceeds twenty-five years is a real estate right under s. 1 of the Real Estate Taxation Law, with purchase tax and appreciation tax.
- Write what happens to the building and the investment at the end of the term: reversion, compensation, or renewal, on terms fixed today rather than negotiated then.
- Arrange the financing: a mortgage on the recorded leasehold, the lessor’s consent, and what the lender needs to see before funding construction on land you don’t own.
Where deals stall
A leasehold that is recorded, taxed correctly, and ends by a clause written in advance: a right you can build on, sell, and mortgage.
On Israel Land Authority land — capitalization, consent fees, renewal: our land and ILA pageWhat we get asked about residential tenancies
How large a deposit may a landlord demand on a residential lease?
Section 25J of the Hire and Loan Law caps the security a tenant can be asked to post — a bank guarantee or cash — at the lower of two figures: the rent payable for one third of the lease term, or a sum equal to three months' rent. The section also closes the list of circumstances in which a security may be called, requires reasonable advance notice and an opportunity to cure, and provides that the security is returned within 60 days of the dwelling being handed back or of the tenant's debts being settled, whichever is later.
How quickly must a landlord repair a defect?
Section 25H(b) runs two clocks. A defect that is not trivial and is not the tenant's responsibility is repaired at the landlord's expense within a reasonable time and no later than 30 days from the demand. An urgent defect — in the statute's own words, one that prevents the dwelling being reasonably lived in — is repaired within a reasonable time and no later than three days. If the deadline passes, the tenant moves to the remedies in s. 9: repairing it and recovering reasonable costs, or reducing the rent for as long as the defect stands.
Which costs may not be passed on to the tenant?
Section 25I(b) says so expressly. The tenant does not directly bear the purchase or improvement of fixed systems and installations serving the dwelling (other than adaptations the tenant asked for), building insurance premiums, or payments the landlord owes a third party — including a broker's fee where the broker acted for the landlord. What the tenant does bear is listed in s. 25I(a): rent, taxes imposed on the occupant including municipal taxes, ongoing consumption of water, electricity, gas, and heating, and routine maintenance charges paid to the building committee (va'ad bayit).
Can these protections be waived in the contract?
Mostly not. Section 25N provides that s. 25F — the duty to deliver a dwelling fit for habitation — cannot be contracted out of at all, and that a long list of further provisions may be varied only in the tenant's favor. A clause to the contrary will not hold, even if both parties signed it with their eyes open. One exception sits in s. 25O(b): where the landlord rents to a relative as defined there, the prohibition in s. 25N(2) does not apply.
Which residential leases fall outside this chapter altogether?
Section 25O excludes several categories. A lease of no more than three months with no extension option; a lease of more than ten years where the landlord has no right to terminate earlier; a dwelling whose monthly rent exceeds NIS 20,000 — a figure updated every January 1 by the consumer price index and published in the official gazette; and dwellings in a hotel or rented for vacation use, in an institution, in assisted living, in student or worker housing, and any dwelling governed by the Tenants' Protection Law. Where the chapter does not apply, what protects you goes back to the contract and the state of the register — and a lease over five years does not enjoy the registration exemption in s. 79 of the Land Law.
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