The Fair Rental Law: A Guide for Landlords and Tenants

Fair Rental Law and the Renting and Lending Law

The Fair Rental Law refers to an amendment to the Renting and Lending Law, 5731-1971, which came into effect in the summer of 2017. The dire state of Israel’s housing market and rental sector requires no elaboration.

This was a central cause of the 2011 social protest. Approximately one million Israelis took to the streets, set up tents, and voiced their outrage to pressure the government to address the economic anomaly that had significantly inflated housing prices. Therefore, although the amendment came into effect six years after the social protest, some would argue it is one of its fruits.

The amendment’s wording indicates a dual purpose:

1. To create greater legal certainty regarding rental and lending transactions.
2. To create fairer arrangements for tenants, who are usually in a weaker position than landlords.

Among other things, the amendment defines a habitable dwelling; the landlord’s obligations regarding repairs to the rented property; the guarantees that can be obtained from the tenant; the details that must appear in the contract and the manner of its execution; the status of the tenancy with respect to third parties; and more.

A significant innovation in the amendment is the provision that some clauses of the law cannot be waived; others can only be waived if the waiver benefits the tenant. In other words, even if a tenant signs a rental agreement that undermines their rights under the Renting and Lending Law, the provisions of the law still prevail; and the tenant’s signature on the agreement will not work to their detriment. Therefore, it is very important to be familiar with the provisions of the law in advance and to ensure that the rental agreement does not contradict it; the alternative of arguing afterward is always more problematic.

Standard Rental Agreement 2023 for Download

Does the “Fair Rental Law” apply to all rental agreements?

No. Section 25טו(א) of the Fair Rental Law states that the law shall not apply to the following rental agreements:

• A residential rental agreement for a dwelling that is one of the following:
• A hotel room;
• A dwelling rented for vacation purposes;
• A hostel as defined in the Hostel Supervision Law, 5725-1965;
• A dwelling in assisted living;
• A dwelling in student dormitories – for students or employees;
• A dwelling to which the Tenant Protection Law (5732-1972) applies;
• A short-term residential rental agreement (up to a maximum of 3 months), without the possibility of extension;
• A residential rental agreement for a period of more than 10 years, where the landlord cannot terminate the agreement earlier.
• A residential rental agreement where the monthly rent exceeds NIS 20,000.

According to the Renting and Lending Law: Does a residential rental agreement require a written contract?

Yes. Section 25ב of the Renting and Lending Law stipulates that (1) a rental agreement must be in writing; (2) each party to the agreement is required to sign it; and (3) each party will receive a signed copy of the agreement.

However, it is important to note: This provision conflicts with a previous law from 1969 (Section 79(א) of the Land Law). According to that law, a rental agreement for a period not exceeding 5 years does not require a written contract. The legislator attempted to resolve the contradiction by stipulating in Section 25ב that the lack of a written contract does not affect its validity. In other words, an argument that an oral/implied rental agreement is invalid solely because it is not in writing will not be heard.

Another way to resolve the conflicting arrangement is to apply the rules of interpretation adopted by the Supreme Court, which held that a later specific enactment prevails over an older general enactment. And this is precisely the situation here: The Land Law is general, from 1969; the Renting and Lending Law is specific (only renting and lending), and the amendment to it entered into force in 2017.

What details must be included in a rental agreement?

According to Section 25ג of the Renting and Lending Law, a rental agreement must include the following details:

• The address of the dwelling;
• The details of the parties to the contract (full names, identity card numbers, and contact address);
• A description of the dwelling, furniture, and fixtures, including a description of the adjacent common property elements that have been rented;
• The rental period, the existence and nature of an option to extend the period;
• The existence of a right to terminate the contract and the conditions for termination;
• The rent, the due date, and the method of payment;
• Additional payments payable by the tenant that are not rent, if any, and their amount;
• Defects/flaws in the dwelling that are not of minor value and are known to the landlord at the time of entering into the contract;
• Anything in the rented dwelling or in the property where it is located or in its surroundings that causes or may cause a substantial disruption to the use of the dwelling and is known to the landlord at the time of entering into the contract.

What constitutes an uninhabitable dwelling? What is the legal recourse for an uninhabitable dwelling?

Section 25ו of the law stipulates that the landlord is obligated to provide a habitable dwelling. A landlord who provides an uninhabitable dwelling shall be considered to have breached the rental agreement; thus, the tenant shall have a cause of action for breach of an unprotected rental agreement.

According to the first schedule to the Renting and Lending Law, a dwelling is uninhabitable if one of the following applies:

1. It does not have a drainage system, including a system for the proper disposal of sewage and wastewater;
2. It does not have an electrical system or lighting system;
3. It does not have ventilation and natural light openings, as well as doors and windows for closing these openings; including a main entrance door with locking mechanism;
4. It does not have a drinking water supply system;
5. It does not have a partition between the toilet and the dwelling;
6. There is an unreasonable risk to the tenant’s safety or health.

Who is responsible for repairing defects in the dwelling? Does this obligation apply to all defects?

Many are unaware that a landlord is not obligated to repair every defect in the dwelling. There are types of defects for which the tenant alone is responsible. The manner of repairing defects – including the time frame – is also a matter for discussion.

Due to the importance of this issue, we have written a separate article on this topic: What are the defects for which each party to the contract is responsible? What is the manner of their repair and how long does it take to repair each defect? For more information on defects in the dwelling.

Is it permissible to sublet a dwelling without the landlord’s consent?

The assumption is that it is not. Section 22 of the Renting and Lending Law stipulates that a tenant may not transfer their rights under the rental agreement to a third party or sublet the dwelling without the prior written consent of the landlord.

There are exceptions to this rule; that is, the tenant will be permitted to transfer their rights under the rental agreement if one of the following applies:

• The landlord did not consent for unreasonable reasons; or –
• The landlord conditioned their consent on unreasonable terms.

What constitutes “unreasonable terms”? This is an interpretive question that will be examined as needed according to the specific circumstances of the case in question.

Is the tenant obligated to allow the landlord to inspect the dwelling at any time?

Not exactly. Section 17 of the Renting and Lending Law stipulates: The tenant is obligated to allow the landlord to inspect the property and make repairs, only if all of the following conditions are met:

1. The landlord wishes to arrive at a “reasonable time” (and not conduct a surprise visit at 3 a.m.);
2. The landlord notified the tenant of their wish to inspect the rented property or make changes thereto, with reasonable notice in advance;
3. The landlord’s visit will minimize disruption to the tenant as much as possible.

Note! One of the innovations of the Fair Rental Law is that some of its provisions cannot be waived; in other words, provisions of a rental agreement that contradict the law are void.

Most other parts cannot be waived unless the waiver works in favor of the tenant. However, the tenant’s obligation to allow the landlord to inspect the property is one of the provisions that can be waived in a rental agreement (Section 25יד of the Law).

In other words, a landlord may stipulate in the agreement that they are entitled to inspect the property even without prior notice and at any time they choose. However, if this is not stipulated in the agreement, the three conditions listed above apply.

Is a landlord permitted to prohibit the introduction of an animal into the dwelling?

Yes. The Renting and Lending Law is silent on the specific issue of animals; however, it does stipulate that the landlord shall determine the extent and manner of use of the dwelling. In other words, if a landlord wishes to stipulate that there is a prohibition on bringing in animals – so it shall be.

Note! Landlords often submit generic rental agreements found on the internet and are not even aware of the clause restricting animals in the dwelling. Then, when resourceful tenants ask about the clause, they sometimes receive verbal consent to bring an animal into the dwelling.

However, today, most rental agreements include an additional generic clause: that any representation and/or agreement that does not explicitly appear in the contract is void.

Thus, if the relationship with the landlord escalates, they may wave this clause that voids any representation/agreement not in the contract; and under this, claim that the tenant breached the rental agreement by bringing in an animal.

Therefore, tenants would do well to carefully read the rental agreement and ensure that any condition that is important to them is written therein.

Is a landlord permitted to demand any security deposit for a rental agreement?

Many tenants (especially in central Israel) encounter demands to provide multiple security deposits in high amounts. From security checks, to promissory notes, and even to a bank guarantee of thousands of shekels (in the best-case scenario).

The Fair Rental Law aims to put an end to this phenomenon by setting a maximum amount for security deposits and also outlining methods for their collection and payment. In a separate article, we reviewed every question in this context:

What is the maximum amount of security deposits; how many security deposits can be collected; and when a landlord may collect them. For more information click here.

How should a tenant return the dwelling at the end of the rental period?

Upon termination of the rental period, the tenant shall return the rented property vacant of any person or property, except for the landlord’s property used in the rented property (Section 20א of the Renting and Lending Law).

If the tenant returns the property in the aforementioned manner, the landlord must accept the rented property (Section 20ב of the Law). A negative arrangement can be read from this:

If the tenant does not return the property as stated, the landlord may refuse to accept the rented property; and accordingly, not release the tenant from their obligations as such, with all that this implies.

What should be done if a party breaches the provisions of the law or the rental agreement?

The wisest course of action is to attempt to resolve matters with the other party without resorting to legal channels. If an amicable solution is not reached, there is no choice but to file a lawsuit, which will usually be a small claims lawsuit.

If we remove from the picture landlords who submit promissory notes for enforcement in the bailiff’s office and commercial property rental lawsuits, a small claims lawsuit will usually be the preferred route. There are two main reasons for this:

1. The advantage of conducting a fast, inexpensive, and efficient legal proceeding in a Small Claims Court.
2. The amount of the claim usually does not exceed the ceiling for claims in the Small Claims Court (NIS 38,900, as of January 2023).