Its called the "Fair Rental Contract Law" - what does it cover?

Until recently, there has been no standard rental contract in Israel, and the contract has been a function of negotiation between the landlord and the tenant (or non-negotiation in many cases!).

As many of you may have experienced, landlords with apartments in desirable locations have pretty much been able to ‘name their terms’ and if the tenant wasn’t happy with these terms, or with the landlords behavior after already having moved in, it was simply a case of “talk to the hand (or the British equivalent - "like it or lump it")! Someone else will come to rent the apartment instead of you”.

Therefore, one of the main achievements of this new law has been to provide for a standard rental contract with many clearly laid out terms and conditions. If either side wants to add a clause to the contract which goes against what is laid out by the law, then this clause is legally invalid.

Given the importance and advantages that this law provides, not least for olim chadashim unfamiliar with local norms and the language, this month we asked our affiliate, Dorit Stern, founding partner of Olim Shield and an expert in Israeli rental contracts, to provide our readers with a breakdown of the major points that the new law entails. Dorit's contact details can be found at the end of the article for anyone who has any questions or needs help with their contract.

Enjoy!

Dorit writes:

A new law has passed regarding rental contract regulation. The law tries to make “seder” (order) in a field that is still very much unregulated.

Although, at some point it was being discussed that the law would cover or limit rent increases in future years, this paragraph didn’t pass with the present bill.

These are some of the important points the law covers:

1. The landlord will hand over the apartment as a “suitable” apartment as agreed

between him and the tenant. 2. The tenant will not be able to claim the apartment “unsuitable” if he knew of the issue before hand or if he had come to know of it but didn’t notify the owner. 3. Any paragraph in the contract which exempts the owner from accepting responsibility for the apartment being “unsuitable” is invalid. 4. According to paragraph 25ו(א) of the new law- the apartment must be fit to be lived in – the new law even goes to list what items need to be in the apartment for it to be fittingly called an apartment · The apartment must have a draining system · Must have electricity and lights · Must have ventilation, natural light, windows and doors to close these openings which allow the flow of air and natural light · Must supply drinking water · Must supply partition between bathroom and the apartment · The apartment cannot endanger the health and safety of the tenant 5. The tenant is responsible for any damage that is cause by out of the ordinary use – the law states that the tenant is responsible for issues which are listed as his responsibility unless otherwise agreed on – that is why it is very important to review and negotiate a contract properly. 6. The landlord is responsible for any fees associated with purchasing or improving the value of the apartment (other than if they were specifically asked by the tenant) 7. The landlord is responsible for structure insurance 8. Paragraph 25ט(ב)(3) explains that the tenant is not responsible for payments that the landlord owes to a 3rd party, including a broker's fee to the broker – if the broker acted in behalf of the landlord, as well as fees to the lawyer who drafted the contract (if they acted on behalf of the landlord). 9. If the landlord requested a guarantee which costs money to supply (such as a bank guarantee or cash) it will be limited to a 3rd of the total rent or 3 months’ rent - whichever is lower. 10. The landlord is allowed to use the security only for: (But he must notify the tenant before use) · Non-payment of rent · If the tenant didn’t pay anything he/she is responsible for, or bills · The tenant didn’t evacuate the apartment based on the terms of the contract 11. If there is a clause in the contract that gives the landlord the right to cancel for any reason other than breach of contract, this clause is invalid – unless the same right is given to the tenant. The owner will notify the tenant of the cancellation of the contract 90 days in advance and the tenant must notify the landlord 60 days before vacating.

The law is written in a very clear way in order to start regulating an area which has been unregulated until today. It is not yet fool proof however, as some of the law is still held to interpretation, however it is a strong starting point for any negotiations and provides a legal 'ground for argument'.

For any questions or advice contact me here, or at d@y-mlaw.co.il