The author is a partner and manager of the real estate department at Negbi, Cohen, Eyal & Co.
Background: The short-term residential apartment rental market for tourism in Israel is thriving. In the absence of horizontal legislative regulation or municipal legislation, each case will be examined individually according to the condominium regulations which become the deciding factor.
Facts of the case: The Daniel Hotel in Herzliya Pituach is a registered condominium with several wings. Some units are intended for hotel use while the others are residential apartments benefiting from the hotel’s services. Migdal Daniel Melon Apartments Ltd., which owns the rights to the units intended for hotel use, has filed lawsuits against apartment owners living in the hotel (the defendants) to stop them from renting their apartments to third parties for vacation or tourism purposes. The plaintiff cited a provision in the agreed upon regulations of the condominium, stating that the residential apartments will be used for living only, and that renting it out harms her by running a competing business with the hotel.
The defendants did not deny that they lease out their apartments for vacation purposes, arguing that the condominium is not a normal one, but a special condominium defined in the regulations as an “apartment and vacation hotel” with clear hotel character.
The decision: The supervisor of the land registry in Netanya, Erez Steinberg, accepted the plaintiff’s claim and prohibited the defendants from renting out their apartments for tourism and short-term recreation purposes. Steinberg stated that the statutes constitute a contract and must be interpreted according to the express opinion and intention of the parties.
The ruling highlighted the importance of carefully checking the regulations of a building before renting its apartments for short-term tourism purposes. In this regard, it is important to note that new construction generally prohibits this.
Overall, the ruling stresses the importance of respecting condominium regulations to ensure proper communal living, with even those who purchase an apartment after registration in agreement bound by the regulations.
Date of ruling: 7/220/2019.
The author is a partner and manager of the real estate department at the firm Negbi, Cohen, Eyal & Co.
background: The short-term residential apartment rental market for tourism purposes is booming. In the absence of horizontal legislative regulation in Israel (or municipal legislation), each case will be examined on its own merits and the condominium regulations become the decisive legislation.
The facts of the case: The Daniel Hotel in Herzliya Pituach is registered as a condominium in the Land Registry Office, and includes several wings. Some of the units in the building are intended for hotel use, while the rest of the units are residential apartments that benefit from the hotel’s services.
The plaintiff, Migdal Daniel Melon Apartments Ltd., owns the rights to the units intended for hotel use, and has filed lawsuits against several apartment owners living in the hotel (the defendants).
In the lawsuit, the plaintiff requested that an injunction be issued prohibiting the defendants from renting their apartments to third parties for vacation and tourism purposes, as well as an order prohibiting them from advertising their apartments for rent on the various tourist sites (AIRBNB, BOOKING). The plaintiff based her claim on a provision in the agreed upon regulations of the condominium which expressly states that the residential apartments will be used for living and not for any other purpose. In addition, the plaintiff claimed that the defendants’ prohibited use of the residential apartments they own harms her by the fact that the defendants are, in fact, running a parallel business that competes with the Daniel Hotel, and this is contrary to another provision in the regulations which states that they are prohibited from interfering with the proper operation of the hotel as a guest hotel.
The defendants did not deny that they do rent out their apartments for vacation purposes for short periods because, according to them, there is no legal impediment that prohibits them from doing so. They argued that the condominium is not a normal condominium but a special condominium defined in the regulations as an “apartment and vacation hotel” and hence the residential apartments have a clear hotel character.
The decision: The supervisor of the land registry in Netanya, Erez Steinberg, accepted the claim and prohibited the defendants from renting out the residential apartments they own for the purpose of tourism and recreation for short periods of time, for several reasons. The inspector stated that the statutes constitute a contract for everything and therefore, must be interpreted according to their express opinion and the intention of the parties.
As for the plaintiff’s claim of business damage to the hotel, the defendants were unable to refute this claim. on the contrary. Some of them even stated that the rental of the residential apartments by them is conducted in a completely business manner. The inspector determined that the defendants’ actions interfered with the proper operation of the hotel, contrary to the provisions of the regulations.
the meaning: The ruling recognized the fact that the bylaws of a condominium constitute a contract for everything between the apartment owners and themselves, and therefore must be interpreted in accordance with its instructions and the intention of the parties, and the shared life in the building should be managed accordingly. The fact that a person was not a party to the regulations of the condominium and purchased his apartment after he was registered has no significance.
The ruling added another layer to the owners of residential apartments who want to rent them out for short-term tourism purposes – the planning inspection of these apartments is not enough. It is also necessary to carefully check the regulations of the building where they are located. In this regard, it is important to note that in new construction, you can see in almost every regulation an explicit instruction that prohibits this.
7/220/2019