Tabu, the ILA and housing companies: where exactly are your rights registered?

Why it matters

Section 7 of the Land Law, 5729-1969, provides that a transaction in land requires registration and is completed by registration, and that a transaction not completed by registration is regarded as an obligation to enter into a transaction. In other words, until registration you hold a contractual obligation, not ownership. That is why registering the rights in your name is the conclusion of the transaction, not a technicality.

Added to this is section 9 of the Law, which deals with conflicting transactions: where a person has undertaken obligations to two parties, the right of the first prevails, but a second purchaser who acted in good faith and for consideration and registered the transaction in its favour may prevail. That is why registration, and in the meantime the cautionary note, are not formalities but real protection.

The Land Registry Office (Tabu)

This is the public register of rights in land. For settled land, section 125 of the Land Law provides that registration constitutes conclusive evidence of its content. The document issued from it is a Land Registry extract, which shows the owners, leases, mortgages, attachments and notes.

Only at the Tabu can a cautionary note be registered under section 126 of the Law. Under section 127, as long as the note is registered no transaction conflicting with it will be registered, and it also protects against a subsequent attachment or insolvency proceedings. This is the buyer's principal security between signing and registration.

The Israel Land Authority

Most land in Israel is not privately owned but belongs to the State, the Jewish National Fund (Keren Kayemeth LeIsrael) or the Development Authority, and is managed by the Israel Land Authority. In these cases what is sold is not ownership but a leasehold, for a long term and on set conditions.

This is where terms with direct financial consequences come in: whether the lease is capitalised, that is, whether the lease fees for the entire term were paid in advance; whether the Authority's consent is required to transfer the right; and whether there are payments or restrictions relating to building and use.

A lease may be registered at the Tabu, in which case it appears in the extract, or it may be recorded only in the Authority's own books. This difference affects the type of confirmation you receive and the length of the process.

Housing companies

When a building has been built and the rights in it have not yet been registered at the Tabu, sometimes in the owner's name and sometimes as a condominium, the rights are recorded in the meantime in the books of a housing company: a company that keeps the register of the residents' rights until registration is completed.

The document corresponding to the extract is a confirmation of rights. Unlike a Land Registry extract, however, a confirmation of rights is not a public register and does not carry the evidential weight of registration. Moreover, a cautionary note cannot be registered on it, so the security in the transaction is structured differently: an undertaking to register a mortgage, the company's undertaking to record a note in its books, and sometimes a trust arrangement.

An interim situation of this kind sometimes lasts for many years, and it is one of the common causes of delay in transactions.

The combinations, and where the mistakes begin

• Private ownership registered at the Tabu: the simple case. An up-to-date extract tells almost the whole story.
• An ILA leasehold registered at the Tabu: the right appears in the extract, but its terms are set by the lease agreement with the Authority, and its consent is sometimes required for a transfer.
• An ILA right not registered at the Tabu: recorded in the Authority's books, and sometimes through a housing company. Confirmations are required from both bodies.
• An apartment in a building not yet registered as a condominium: the rights are in a housing company's books, and a cautionary note is not possible. The security in the transaction must be adapted accordingly.
• A registered condominium whose attachments do not match reality: a parking space or storeroom used in practice by one resident but registered as common property. A discrepancy of this kind usually comes to light at the next sale.

What to check in practice

• Identify the source of the right: a Land Registry extract, a confirmation of rights from the ILA or a confirmation from the housing company, and do not settle for what you are told verbally.
• Check that the registration matches what you see in the property: area, attachments and building additions.
• Find out which confirmations are needed for the transfer, who issues them, and how long it takes.
• Match the payment schedule and the security to the relevant registration route.
• Make sure who undertakes to complete the final registration, by what date, and what happens if it is not done.

Bottom line

Where the rights are registered is not a technical detail at the end of the transaction but its starting point. It determines what security is possible, what the realistic timetable is, and what exactly will pass into your hands at the end. It is worth finding out before you agree on a price and dates.

Nothing in this article constitutes legal advice or a substitute for it, and every case is assessed on its own circumstances.