ISRAEL Law and Practice Contributed by: Hagit Bavly and Adi Daniel Zamir, Arnon, Tadmor-Levy
The court may approve a transfer of the lease to a third party, even if the agreement prohibits such transfer, provided that it does not badly affect the lessor. The court may determine ways to ensure the fulfilment of the obligations accord - ing to an agreement that has been transferred or an agreement that the court ordered to be left in force despite its violation. 6.16 Forms of Security to Protect Against a Failure of the Tenant to Meet Its Obligations The best security for lessors is, of course, a bank guarantee. From a legal point of view, this is “safer” than a cash deposit that a trustee appointed to an insolvent tenant may demand be “returned”. The industry standard is a bank guarantee equal to three to six months’ worth of rent (plus VAT), plus management fees. Other securities include deposits, promissory notes and personal guar - antees. 6.17 Right to Occupy After Termination or Expiry of a Lease The tenant has no right to stay on the property after the end of the lease. However, if they do, the lessor is not allowed to take any “self-help” action: they must petition the court through an expedited process, seeking an eviction order. Another effective measure is to stipulate liqui - dated damages if the property is not vacated after the end of the lease. 6.18 Right to Assign a Leasehold Interest The Leasehold and Borrowing Law, 1971 states that the tenant may not transfer their rights and/or obligations under a lease agreement or sublease the leased premises, except with the
consent of the lessor. However, if the lessor refuses to consent to the transfer for unreason - able reasons, or conditions their consent with unreasonable terms, the tenant may transfer the lease without the consent of the lessor. In a lease agreement, it is possible to agree differently in this regard. Usually, commercial lease agreements state that the tenant may not transfer their rights and/or obligations under a lease agreement or sub - lease the leased premises without the lessor’s consent. Usually, when the tenant is a corpora - tion, the agreement stipulates that the transfer of control in the tenant will also be considered a prohibited transfer of rights. 6.19 Right to Terminate a Lease Lease agreements usually include a (broad) defi - nition of breach that may result in termination of the lease – primarily for non-payment of rent or violation of the purpose of the lease. The Leasehold Law protects the tenant where the property (for specific reasons related to the property or its access, as opposed to a “general” market situation) cannot be used for the purpose of the lease, allowing the tenant to not pay rent for the period when the use of the property was precluded. However, if the tenant exercises this right, the lessor may, after a reasonable time, ter - minate the lease (unless the tenant waives their right to not pay). 6.20 Registration Requirements A lease exceeding five years requires a written document. A lease exceeding ten years requires registration in the Land Registry. There is an obligation to report a leasehold agreement to the tax authorities if the lease period (including optional extension periods) exceeds 25 years. In the event of a leasehold exceeding 25 years,
432 CHAMBERS.COM
Powered by FlippingBook