In the previous article, we addressed the question of whether a holder of rights in real estate can demand the dissolution of the joint ownership against the wishes of the other co-owners. Returning to the example presented in the previous article...
Can the Receiver Demand the Dissolution of the Joint Ownership?
Under Section 33 of the Tenant Protection Law, it is provided, among other things, that a debtor (the husband) who holds a property he owns, and his co-owner (the wife), may not be evicted even if the debtor (the husband) fails to repay his debt and the property is sold through execution proceedings or bankruptcy proceedings. If the property is sold, its owners (the husband and wife) become, through these proceedings, tenants of the new owner who acquires it from them. In this way, the legislator sought to protect the holders of rights in the property so that they would not find themselves without a roof over their heads.
Over time, a trend developed both in case law and in legislation that sought to narrow the application of Section 33 of the Tenant Protection Law, thereby eroding the degree of protection this section had granted until then to the holders of rights in real estate.
For example, and in accordance with Section 38 of the Execution Law, a debtor (the husband) may be evicted from a residential apartment only if the party seeking the eviction guarantees that the debtor and his family will have reasonable, alternative housing.
Beyond that, Section 40A of the Land Law provides that in the case of dissolution of joint ownership in real estate, Section 33 of the Tenant Protection Law shall not apply, and the parties seeking the dissolution will be required to arrange alternative housing for the spouse (the wife) and the children themselves.
Accordingly, it can certainly be said that the status of the holders of rights in real estate is not immune to the dissolution of the joint ownership by the receiver, and the court tends to consent to the dissolution of the joint ownership in the property, with the intention of balancing between the creditors and the other holders of rights in the property, who will receive their money from the sale.
The Amon Law Firm accompanies clients who seek to realize their rights in properties where disputes exist, and assists by providing legal recommendations, especially in cases where there is a family relationship between the parties, in order to resolve the dispute amicably and avoid unnecessary legal proceedings.
Having discussed the various options for bringing about the dissolution of the joint ownership in the property, we will now present the various options available to the parties for its sale.
An Illustrative Example
Four siblings inherited a residential apartment in a condominium. Each of the siblings has 25% of the rights in the apartment. After negotiations, one of the siblings (Shimon) decided to buy the share of two of his other siblings, and now his ownership percentage in the apartment has grown to 75%. The share held by his sibling (Yaakov) is 25%.
After a certain period during which there were disagreements between the rights holders, Shimon filed a claim for the dissolution of the joint ownership in the apartment. Since this is a residential apartment that constitutes a separate planning unit, which cannot be divided, and a division in kind is not possible, Shimon sought to dissolve the joint ownership in the apartment by purchasing Yaakov’s share.
What Are the Possible Methods of Sale?
If we look at the provision of Section 40(b) of the Land Law, which states that: “The sale shall be carried out in the manner in which attached real estate is sold in execution proceedings, unless the court has ordered another manner that it deems more efficient and just in the circumstances of the matter,” it appears that under this section, two alternatives are available to the applicants.
The first alternative directs the sale of the apartment to third parties by way of a public auction, and the second alternative allows flexibility and independent discretion to the court, in that it may order another manner that it deems “more efficient and just”.
If we consider the first alternative, we can reasonably assume that the residential apartment will be sold by a receiver to a third party, in order to maximize the consideration received for the apartment; but this process often produces the opposite result, because of the buyer’s expectation of purchasing a residential apartment at a bargain price, certainly at a price lower than its value on the open market.
In the second alternative, the court may order the sale of the apartment in accordance with the circumstances of the case, on the assumption that there are additional circumstances relevant to each case. Returning to the example mentioned, the court may permit Shimon to purchase Yaakov’s share if it finds substance in his arguments, and in this decision the court considers it to be efficient and just in the circumstances of the case.
These are only some of the various options, since this article discusses the example presented above. But as was emphasized, there are additional options for bringing about the dissolution of the joint ownership in the property, namely by dissolution through registration of the building as a condominium. This note is intended to emphasize to the reader that several options exist, and the selection of the best option for the client is considered even before turning to the court.
For convenience, the relevant sections of the law are set out below:
Relevant Sections of the Law:
Section 33 of the Tenant Protection Law:
(a) Where a person held a property as its owner or long-term lessee, or as one of the owners or long-term lessees, and his right in the property lapsed by reason of its sale in the execution of a judgment or of a mortgage, or in bankruptcy, or by reason of the division of the property in a partition suit or in a land settlement, or by reason of its division through registration in the condominium register as provided in Section 42 of the Land Law, 5729-1969, the holder shall become a tenant of the new owner of the property, or of the new long-term lessee.
Section 40A of the Land Law:
(a) Where the court has decided, under Section 40, on the dissolution of joint ownership in jointly owned real estate that is an apartment of spouses serving them for residence, by way of sale, it shall not order its implementation, and the sale shall be delayed, so long as the court is not satisfied that the minor children of the spouses and the spouse holding them have, together, been provided with another housing arrangement suitable to their needs, including an interim arrangement for temporary residence suitable to their needs, for a period it shall determine.
(b) The provisions of Section 33 of the Tenant Protection Law [Consolidated Version], 5732-1972, shall not apply with respect to a person who was a co-owner in an apartment in which the court decided to dissolve the joint ownership, as stated in subsection (a).
Section 38 of the Execution Law:
“Where the attached real estate serves, in whole or in part, as a residential apartment for the debtor, the Registrar of Execution shall not be permitted to order the sale of the real estate and the eviction of the debtor and his family members living with him from the real estate, except after it has been proved to his satisfaction that the debtor and his family members living with him will have a reasonable place of residence, or that he and his family members living with him have the financial ability to finance a reasonable place of residence, or that alternative accommodation has been made available to them.”
