Court Permits Two Apartment Owners to Be Compelled to Join an Urban Renewal Project, Subject to Compensation Being Paid to One of Them

The Dispute Over the Project

The plaintiffs and the defendants are owners of properties on parcels 356–358 and part of parcel 487 in block 6159, at 75–79 HaRo’eh Street, Ramat Gan. The existing buildings contain 30 apartments and seven commercial properties; the plaintiffs own 35 properties or are entitled to have rights in them registered, while the two remaining apartments belong to the defendants. The project involves demolishing the buildings and constructing a new building containing approximately 95 apartments and commercial space.

What Was Offered to the Property Owners

Under the agreement, each apartment owner is to receive a new apartment equal in area to the measured area of the former apartment, plus 12 square meters, a 10–12-square-meter balcony, a parking space and, if possible, a storage room. It was decided that the two smallest apartments would receive an addition of approximately 15 square meters, bringing their area up to the minimum of 50 square meters prescribed by the plan. The developer also undertook to pay rent during the evacuation period and provide guarantees.

The Defendants’ Arguments

The defendants argued that they did not oppose the renewal in principle, but believed that the terms were unequal and economically unviable for the larger apartments. Among other things, they argued that the feasibility assessment was based on a rejected permit application and that economic viability had therefore not been established. The second defendant also argued that the uniform 12-square-meter addition reduced her proportional share compared with the owners of the smaller apartments.

The Court’s Legal Position

The court applied the Evacuation and Construction Law (Encouragement of Evacuation and Construction Projects), 5766–2006, and considered whether the refusal was “unreasonable.” It noted that under section 57(a) of the Land Law, 5729–1969, the share in the common property is generally linked to the apartment’s area, and in the absence of another agreement, building rights are allocated according to that share. Accordingly, granting a uniform addition to all apartments infringes proportional equality and has an economic impact on the second defendant.

Outcome of the Proceedings

Despite the infringement of equality, the court did not consider it grounds for blocking the entire project: four of the five owners of apartments exceeding 100 square meters had agreed to the terms, and a proportional reallocation of the 360-square-meter addition would have deprived the smallest apartments of the required minimum area. The court decided to grant the claim against the first defendant because the proportional calculation would have entitled her to approximately 10.02 square meters instead of the 12 square meters offered to her. The second defendant may also be compelled to enter into the transaction, but only subject to payment of balancing compensation; the original excerpt provided ended before the final calculation of the compensation amount and before the full wording of the judgment’s operative section.

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