Lawyers who handle key money tenancies hear one question again and again: may a protected tenant rent out the apartment?
Paying key money, which buys a statutory protected tenancy, does not make you the owner of the apartment. It gives you, the protected tenant, the right to live there for the rest of your life.
But what if the protected tenant wants to move to another city and rent the apartment out, using the rent he collects to lease a home elsewhere? Would that still count as exercising the right of residence the Tenant Protection Law grants him? And what does the law actually say: may a key money apartment be rented out at all?
This article answers the question of whether a key money apartment may be rented out, and reviews the rights and duties of the protected tenant along the way.
Renting out a key money apartment – what does the law say?
The law is direct: the property may be used only as a residence for the tenant and his family members. A protected tenant may not rent out the apartment, may not take in a subtenant, and may not run a business from it. If he rents the apartment to another tenant, that alone is a lawful ground for evicting him from the property.
Renting out a key money apartment? 5 things you should know
To understand why the Tenant Protection Law bars a protected tenant from renting out the apartment, and to fill in the picture around it, here are 5 points worth knowing beyond the rental question itself.
First, what is key money?
Key money is an Israeli concept, anchored in the Tenant Protection Law. The key money law exists to preserve the rights of protected tenants, people who live in properties they do not own but hold the right to live in them until the end of their days.
The Tenant Protection Law grants protected tenants an open-ended right to remain in the property, but it does not confer ownership.
Key money is not a substitute for rent. It is the price of the tenant’s protected right to live in the property.
To acquire that right, the tenant pays the property owner an amount ranging from thirty to sixty percent of the property’s market value. On top of that one-time payment, the tenant pays a low monthly rent, as set under the Tenant Protection Law.
Who is a protected tenant?
A protected tenant is a tenant who meets one of the following conditions:
He rented the apartment or business before 1940.
He paid key money as the law requires.
His rental agreement states that he receives protected tenant status.
What is the Tenant Protection Law?
The Tenant Protection Law lets a tenant who qualifies as protected live in the apartment until his death while paying rent far below current market rates. As long as none of the eviction grounds listed in the law applies, the protected tenant may stay in the apartment for life.
On the tenant’s death, or when a family breaks up, the protected tenancy can pass to family members entitled to it under the law. A protected tenant who chooses to vacate the property is entitled to receive part of the key money back.
By law, repairs essential to the property’s overall upkeep are shared between the landlord and the tenant. These include plumbing, cracks in the walls, repainting, roof maintenance, leak repairs, exterior water pipes, railings, shelters, stairwells, and storage rooms.
Repairs in the common areas or outside the apartment fall on the property owner alone.
Repairs inside the apartment that are not critical to the property’s general maintenance are the tenant’s job, at his own expense.
What happens when the protected tenant passes away?
When the protected tenant dies, a spouse, children, or other relatives may inherit the protected tenancy, but only if they lived with him for at least six months before his death.
Can a protected tenant be evicted?
The law lists several grounds for evicting a protected tenant, and renting the property to another tenant is one of them.
Other grounds include deliberately disturbing the neighbors, failing to pay rent, intentionally damaging the property, and any other breach of the terms set out in the Tenant Protection Law.
The bottom line: may a key money apartment be rented out? No. Renting it out is forbidden.
The Tenant Protection Law protects the protected tenant’s rights, among them the right to live in the apartment, to maintain it, and to pass it on, but it also spells out his duties and the prohibitions that bind him. If the tenant breaks them, they become grounds for eviction.
