In Israel, there are two types of land available. Property may be built upon: Private land or Land owned by the Israel Land Authority (Minhal) and
leased for a period of years. Privateland is in short supply in Israel, and only some 5% of the land is private. Privateland is available primarily in
the older cities and towns, and other areas which were settled early in the history of the modern state.
The majority of the country's land is held by the Israel Land Authority, which was created in 1960 to administer lands held by the state, primarily
those which had been acquired over the years by the Jewish National Fund. In keeping with the nationalistic and socialistic concepts prevalent
in the governments of the time, those lands were considered national lands, and were not to be sold permanently, but rather to be leased for
a period of 49 years, with an option for renewal for an additional 49 years. The lease period corresponds with the biblical concept of the Jubilee
year, in which all lands sold during the 49 year Jubilee cycle were to be returned to their original owners in the 50th year.
Minhal land is offered for lease in periodic closed bid auctions which are announced to the public in the newspapers. The land is initially leased
under a development contract which requires construction on the property within a specified period of time, usually three years, after which
the lessee receives an actual lease. The construction requirement is intended to encourage development, and to prevent speculative purchase
of land, where an individual might seek to lease Minhal land in anticipation of a price rise and subsequent resale. In addition, the Minhal requires
lessees to submit to it for approval all building plans on properties it leases, in addition to the normal approval process of local authorities.
This contract provision adds more time, effort, and cost to the approval process.
Minhal land is leased without tender to specific end users only in special situations where the government seeks to encourage growth,
such as development areas where land may be leased directly to industrial companies and developers for special uses.
The predominant form of Minhal land leases are capitalized land leases, where the major portion of the entire stream of payments for the 49
year lease period is prepaid at the outset, with the total price calculated to take into account the value of the up front payment. The
most common type of lease is executed by an initial payment of 91% of the property value, with no additional payments. The
remaining 9% is symbolically the state's portion of ownership.
The initial lease is for a 49 year period, with an option for an additional 49 years.
Although many buyers prefer private land, nevertheless, most investors have no choice but to purchase Minhal land. It is interesting to note
that prices for private versus Minhal land do not vary greatly within the same property market.
Identifying and Registering Property Title
Formal identification of properties in Israel is by the block and lot system, where a large area -the "block"- is defined, numbered, and then
split up into smaller pieces, the "lots". The actual size of a block and its individual lots can change dramatically from area to area, depending
usually upon the actual amount of development in the area. As the density of development increases, the number of blocks and lots increases
and their size decreases.
When investigating the ownership and title of a piece of property the purchaser must first check the Tabu, as the land registry is commonly called.
The word Tabu comes from the name of the land registry during the Ottoman Empire. There, upon payment of a fee and submission of a request
listing the property's location, the registry provides a document listing the size of the property, its owners, and any mortgages, liens,
or other restrictions on use or ownership.
If the property is Minhal, the Tabu registration will generally not list the name of the lessee, and the potential buyers must request the seller to
provide copies of the contract with the Minhal, and to check the file at the Minhal itself to verify that all payments have been made, the
existence of mortgages or other liens or payments to the Minhal, and that the property may be transferred. Today the Minhal is undergoing a
process of registering land in the land registry as a means to centralize all land ownership information.
The title registration of many residential properties, particularly those which were constructed on Minhal land by one of the large public
building companies such as Shikun Ovdim or Shikun U'Pituach, has remained at the offices of these companies, who function as land
registries for subsequent re-sales of these apartments.
Title insurance is new to Israel and is currently only available for residential property. The Israeli real estate law sees registered title and
not contracts or occupation as the only determination of ownership. Thus one must verify title and register title to protect ones
possession of property.