New regulations demand full transparency in urban renewal

In a significant development for apartment owners involved in urban renewal projects, Justice Minister Yariv Levin, alongside Construction and Housing Minister Yitzhak Goldknopf, has presented new regulations governing the structure and details of urban renewal agreements to the Knesset's Interior and Environmental Protection Committee. These regulations mark a groundbreaking move toward complete transparency in urban renewal transactions.

Their primary objective is to enhance transparency, foster fair dealings, and enable cancellation of transactions failing to meet required standards.

Since the publication of regulations in 2022 mandating developers to hold meetings with apartment owners and present them with detailed proposals before any transaction, the focus now shifts to establishing binding rules concerning the transactions themselves. The regulations, addressing both transaction conduct and content, introduce new requirements refined from field experience. They apply to both eviction-construction ("Pinui u'Binui") and building renewal transactions, including TAMA 38 and its alternatives.

Key provisions of the regulations:

• A lawyer must verify the apartment owner's signature on an urban renewal deal, ensuring the owner comprehends the deal's essence and implications, and signs voluntarily.

• The deal must provide complete identifying details of the developer, disclosing the controlling owners, enabling the apartment owner to know whom they are dealing with.

• Disclosure of any potential conflict of interest of the developer and associates involved in the project is mandatory.

• The type of transaction (building clearance, demolition and rebuilding, or thickening and strengthening) must be specified in the contract, not deferred.

• The transaction must state the date of the first transaction with an apartment owner, highlighting essential rights derived from this date, such as the right to cancel due to promotion delays and rights of the elderly.

• Maximum dates for building permit approval, issuance, and new apartment delivery must be specified.

• Consideration for each apartment owner in the project must be indicated, with a guarantee of not less than the value of a similar apartment.

• Failure to meet these requirements may render the transaction null, with a registered warning note. The regulations also specify mandatory transaction topics, which can be supplemented by mutual agreement if omitted initially.

Elazar Bamberger, CEO of the Governmental Authority for Urban Renewal, stated, "The regulations include a comprehensive series of urban renewal agreements. They deal with both the method of engagement, as well as its content, all with the aim of promoting fair, transparent and proper engagements, which produce a sophisticated and high-quality market.

"The established arrangements will protect the rights of the apartment owners on the one hand, and will also serve the entrepreneurs by promoting simplicity and uniformity in transactions on the other hand, thus allowing a safe and comfortable ground for their promotion," he said. "Similar arrangements that we created in the past established and greatly improved the conduct of the market, and made possible the enormous scope of activity that we see today in the urban renewal industry."

Justice Ministry Director-General Itamar Donenfeld added, "The regulations are another step in the procedures designed to provide protection to tenants throughout all stages of the urban renewal process. A decision to sign an urban renewal deal is one of the most significant decisions that an apartment owner makes, and the proposed regulations are intended to establish rules for such a deal to ensure that the owner is not disadvantaged within it.

"I would like to thank the Consulting and Legislation Department (Civil Law) headed by the Deputy Legal Advisor to the Government (Civil), Adv. Carmit Yulis," he said.

"Aside from dramatic legislative procedures to promote urban renewal projects, we always have our eyes on the apartment owners and are aware of the need for a protective envelope for them in the increasingly developing market," Yulis said.

"The regulations that have just been submitted for approval by the Knesset's Interior and Environmental Protection Committee are intended to ensure safety for them, to strengthen trust between the various players in the process and to increase certainty in the field," she said. "We received a large number of comments from the public on the draft regulations, with the submitted version reflecting some changes that were decided to be adopted."