In Favor of Homeowners in Urban Renewal: Justice Minister Yariv Levin has released for public comment a draft of regulations in the urban renewal sector, establishing a fixed payment amount for developers if homeowners cancel a deal with them.
The aim is to prevent homeowners from being bound by urban renewal deals that are not advancing within a reasonable timeframe. This was approved as part of the Arrangements Law, which allows homeowners to vote to cancel a deal if the developer is delayed in progressing according to predetermined milestones. According to the law, if homeowners cancels a deal, they will not be considered to have breached the contract, and the developer will be entitled to a fixed payment as set out in the regulations.
Despite this legal arrangement, homeowners have rarely utilized the option to cancel a deal, partly due to uncertainty about the payment they would need to make to the developer for the cancellation, and because they are under pressure from the developer to avoid canceling the deal due to potential high costs.
The purpose of the regulations is to increase certainty for homeowners and reduce their fears about canceling a deal that is not progressing adequately by setting a fixed and reasonable payment amount for the developer when a deal is canceled, thus facilitating homeowners in making an informed decision about canceling a deal with a developer who has not met the legal deadlines for advancing the deal.
"The regulations return the power to the tenants"
The regulations were developed by the Civil Law Advisory and Legislation Department at the Justice Ministry, in collaboration with the Governmental Authority for Urban Renewal, after consulting with industry professionals. The amounts specified in the regulations take into account the stage of the deal and distinguish between deals in evacuation and renewal projects and those based on strengthening plans (TAMA 38 and its successors).
"The proposed regulations are an additional component to increase certainty and trust in urban renewal processes and protect homeowners," according to Carmit Yulis, Deputy Legal Advisor to the Government (Civil Law). "The regulations return power to the residents, allowing them to decide whether to proceed with or cancel a deal in situations where the project is not advancing."
The draft regulations are available for public comment on the government legislation website. The public is invited to submit comments until August 27.