Question 1

Why are guarantors required under the contract and a bank guarantee is not sufficient?

Accepted Answer

A bank guarantee is limited to a fixed monetary amount. If the tenant’s damages exceed the amount secured by the bank guarantee, the landlord may seek recovery from the guarantors.Bank guarantees are also typically time-limited. If not renewed prior to expiration, they may cease to be enforceable.Guarantors provide an additional layer of protection in cases where the tenant lacks sufficient financial means to cover damages. In such cases, the guarantors constitute a “backstop” obligating them to pay if the tenant fails to do so.In practice, guarantors also function as an enforcement mechanism. Once a formal notice is sent to the guarantors detailing the tenant’s breach and that the guarantors will bear the consequences in the tenant's place, they typically exert pressure on the tenant to resolve the matter promptly. This creates an additional incentive for compliance due to third-party involvement and may prevent court proceedings. (practical effect…)

Question 2

If the tenant fails to pay municipal property tax (Arnona), is the landlord required to pay it?

Accepted Answer

If the lease agreement does not specify who is responsible for payment of Arnona (municipal property tax), then under Israeli law the tenant is liable for payment of Arnona. Where the parties have agreed in the lease that the tenant shall pay Arnona, but in the municipal Arnona records (at the municipality) the account remains registered in the landlord’s name (i.e., no request was made to change the registered payer), the municipality will address its demand for payment to the landlord only.The landlord may, of course, enforce the bank guarantee or demand reimbursement from the tenant. However, the landlord may not direct the municipality to pursue the tenant.However, if the landlord has notified the municipality that the property is leased and has submitted a copy of the lease agreement stating that the tenant is responsible for payment of Arnona, then the municipality may not seek payment from the landlord and may pursue the tenant only.(Legal basis: Section 25T(a)(2) of the Rental and Borrowing Law, 1971).(and Legal basis: Section 326 of the Municipalities Ordinance [New Version])(Legal basis: Administrative Appeal 2330/21, The New Central Bus Station in Tel Aviv Ltd. v. Tel Aviv–Yafo Municipality, dated 17.07.2022 (published in Nevo))

Question 3

If the tenant fails to pay condominium maintenance fees, is the landlord required to pay the maintenance fees?

Accepted Answer

Yes.The landlord is liable for payment of the condominium maintenance fees.Even if, under the agreement between the parties, the tenant is required to pay the condominium maintenance fees, the landlord remains liable for payment. This applies regardless of what is stated in the lease agreement and regardless of whether the landlord notified the condominium association that the tenant had agreed to pay the maintenance fees.(See Section 58(a) of the Land Law, 1969)Although, under the law, the tenant is required to pay all current expenses applicable to the apartment, including condominium maintenance fees, the landlord remains liable toward the condominium association for payment of such fees. If the tenant fails to pay, the landlord must pay, and may thereafter seek reimbursement from the tenant.

Question 4

If the tenant does not pay the water bill, are the landlords required to pay the water bill?

Accepted Answer

Under the law, the tenant is required to bear the payment of the ongoing expenses of the apartment, including water. However, the person registered with the water corporation as the “holder” of the property is the one required to pay the water bill.Section 21 of the Water and Sewage Corporations Rules in Israel provides that, as long as a lawful change of registration of the “holder” has not been made, the person registered in the water corporation’s records as the holder remains liable for payment of the water bills, even if he is not the actual occupant.

Question 5

If the tenant does not pay the gas bill, are the landlords required to pay the gas bill?

Accepted Answer

Yes.As long as the change of registration of the “holder” has not been properly effected with the gas supplier, the landlord is required to pay the gas bills.Although, under the law, the tenant is required to pay the ongoing expenses applicable to the apartment, including gas bills, if the landlord has not notified the gas company of the change of holder, the landlord remains liable for payment of the gas bills.The landlord may thereafter approach the tenant (the holder/occupant) and request reimbursement of the payment or enforce any bank guarantee held by him.(See Section 25T(a)(3) of the Rental and Borrowing Law, 1971.)

Question 6

Can the landlord require the tenant to insure the apartment (Property and casualty insurance)?

Accepted Answer

A landlord may not require a tenant to obtain Dwelling coverage insurance. This prohibition is mandatory and cannot be contracted out of.Legal basis: Section 25T(b)(2) of the Rental and Borrowing Law, 1971.However, the parties may agree that the tenant will obtain Fire peril coverage (fire insurance). This is generally permitted under Israeli law. The rationale is that fire risk is closely connected to the tenant’s use and occupancy of the property, making partial allocation of this cost to the tenant reasonable.

AMN

Frequently Asked Questions