A commercial business often relies on the rights and duties of protected tenancy. The protected tenant, the landlord and the property purchasers would all like to better understand their rights and duties at any point of time. When the real-estate is possessed under protected tenancy, we should consider all relevant issues to best serve your interests.
We are here to give you the best advice, whether you sell or purchase a business under protected tenancy, a tenant, or the landlord, and to articulate your legal situation in the simplest terms.
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As of the 1930s, before the establishment of Israel, with the goal of protecting lessees from surging lease prices, laws and ordinances were enacted to intervene in the relationship between private and commercial lessees and landlords, in two main levels: expansion of the lease term, while derogating from the rights of landlords to terminate it, and intervention in the lease fee rate.
The provisions of the law caused transfer of some of the ownership rights from the owners to the tenants, creating a forced partnership and thereby economic fraction, impacting the value of the parties’ rights. Over the years, the original tenant protection legislation changed with the trend of narrowing the tenant protection – both their rights to hold the property and the lease fee rate.
Unlike the ownership right, the protected tenancy right is not a “right in land” with respect to the Land Taxation Law. Therefore, no appropriation tax, purchase tax, or VAT applies to its sale. At the same time, a protected tenant that is a business is liable to pay capital gain tax, since the Income Tax Ordinance considers such a right to be an asset. Selling the ownership right of a property occupied with a protected tenant constitutes sale of a “right in land” but may be subject to exceptions and special provisions under certain circumstances.
Protected tenancy cases usually relate to the following:
In protected tenancy cases it’s very important to understand the rights and duties imposed on each party and their conduct in time. For example, failure to pay lease fee is not a cause for the tenant’s evacuation, unless the landlord demanded the lease fee according to the provisions of the law.
Most protected tenancy conflicts begin with negotiation between the tenant and landlord. Lacking consent, they will be resolved in legal proceedings before the Magistrates Court, including in its service as Lease Court.
We are here to help.
Whether a tenant or landlord, we can help you take initial important actions to put you in the best possible position, pending negotiation or legal proceeding, to reach your desired goal.