Eviction of a protected tenant by consent

To understand what eviction of a protected tenant by consent means, picture two identical apartments in a building in the heart of Tel Aviv: one rents for 9,000 shekels a month, the other is held under protected tenancy for 400 shekels a month.

That is not a joke or an invented example. Israel has about 20,000 properties held under protected tenancy, and their owners find themselves in a frustrating position: they own an income-producing asset but cannot enjoy its returns.

Evicting a protected tenant through the courts is a demanding process that does not always succeed. The preferred solution, therefore, is eviction of a protected tenant by consent.

In this article we cover the key concepts behind eviction of a protected tenant by consent, discuss the compensation owed to the vacating tenant, and compare a protected tenant with a tenant renting on the open market.

Eviction of a protected tenant by consent – 4 concepts worth knowing

The Tenant Protection Law

This law was meant to provide affordable housing for people who could not buy an apartment registered in their own name. In the 1950s and 1960s thousands of new immigrants arrived in Israel, and the state made sure they had a roof over their heads without the constant fear that ordinary renters live with, eviction from the apartment. The Tenant Protection Law lets a tenant who paid key money live in the apartment until his death, which makes eviction difficult. That is why one of the most common ways to end a protected tenancy is eviction by consent.

Key money

The law defines key money as “any consideration other than rent, given in connection with the rental of a leased property, or in connection with the receipt of possession of a leased property under this law, regardless of when they were paid.”

In practice, key money is a payment of about sixty percent of the property’s value, made to the property owner when the contract is signed, alongside a low monthly rent. A tenant who has paid key money is a protected tenant under the Tenant Protection Law. The property is not his, but as long as he has not breached the terms, the owner cannot evict him for the rest of his life. Removing a tenant from a protected property is full of obstacles, except when it is done by consent.

The Rent Tribunal

This is a special tribunal established under the Tenant Protection Law. An owner who wants to evict a tenant from a protected property for cause, rather than by consent, applies to the Rent Tribunal and requests an eviction order.

The tribunal does not grant eviction claims lightly and weighs the consequences the eviction would have for the tenant. In many cases it will require the owner to compensate the protected tenant for vacating.

Urban renewal

Urban renewal projects are carried out to renew, improve and upgrade old residential buildings and city infrastructure. The Tenant Protection Law allows a protected tenant to be moved out as part of a TAMA or urban renewal project, but the eviction must be done by consent and in exchange for financial compensation paid to the protected tenant.

Eviction of a protected tenant by consent – how much compensation?

An agreement to vacate by consent requires the consent and signature of both parties, the protected tenant and the property owner.

In an eviction by consent, the owner must compensate the tenant. The Tenant Protection Law sets no formula for the amount, so the owner weighs the numbers himself: the tenant’s age, the chance that after the tenant’s death a family member will inherit the rights to the property, the chance the tenant will leave voluntarily, for example to move to assisted living or because of a medical condition, the rent the apartment would fetch once vacant, and more. Based on those considerations the owner makes the tenant an offer, and if the tenant accepts, the parties can sign an agreement to vacate by consent.

If the tenant and the owner do not sign such an agreement, the owner is left with other options: selling to the protected tenant, selling the property as occupied, or suing for eviction in court on the grounds of breach of the lease.

Selling to the protected tenant – the owner can offer the tenant the chance to buy the property. The law does not fix the price the owner is entitled to, and it is settled by negotiation between the tenant and the owner. In that negotiation it is wise to involve a key money lawyer, an attorney from Tel Aviv, Jerusalem or anywhere else who focuses on protected tenancy. 

Selling the property as occupied – the owner sells the property together with the rights held by the protected tenant. The price will be far lower than for a vacant property, but some players in the real estate market treat such a purchase as a business opportunity, mainly because of the prospect of a future urban renewal project.

Suing for breach of the lease – a protected tenant is bound by a list of prohibitions and duties. He may not alter the property, sublet it, or run a business in the protected premises, among other things. Each of these breaches, along with failure to pay the monthly rent, is a ground for an eviction claim against the protected tenant.

What is the difference between a protected tenant and an open-market tenant?

The bottom line: the shortest and most effective route is eviction by consent

The law offers several paths for removing a protected tenant from a property, but the easiest and quickest of them, for both sides, is eviction of a protected tenant by consent.