“Pinuy Binuy” in Israeli National Outline Plan #38 Projects
What is Pinuy Binuy in Israeli national outline plan #38 projects? Pinuy Binuy (meaning clearance and construction) is an urban renewal project in which condominiums are destroyed, and new and improved condominiums are constructed in their place. In urban national outline plan #38 (“Tama 38“) it is possible to issue an order for certain buildings to be destroyed that, according to the opinion of an engineer, require strengthening. After the buildings are destroyed, new buildings are constructed in their place that include all the construction rights that were approved in the national outline plan project. Below we explain in detail about Pinuy Binuy by national outline plan #38 and about the job of a lawyer who represents the apartment owners in such a project.
WHAT IS PINUY BINUY BY NATIONAL OUTLINE PLAN #38?
There are many old buildings in Israel that were constructed before the construction standard for protecting buildings against earthquakes entered into force. The collapse of these buildings in the case of an earthquake may cause severe damage to the buildings themselves, as well as to the surrounding buildings. Accordingly, in 2005, the Israeli government created an urban outline plan (numbered 38) in which tax benefits and other benefits are provided to motivate owners of apartments in old buildings to act together and contact entrepreneurs for the purpose of strengthening the condominium that they share. These benefits may include, among other benefits, the following construction rights: the right to add floors to the building, as well as an elevator, a parking lot, and storerooms, the right to expand existing apartments, and the right to build a security room (called a Merkhav Mugan in Hebrew, abbreviated mammad) in each apartment (which is required in every Israeli home).
The plan was amended several times, adding the Pinuy Binuy plan, which allows to completely destroy existing buildings and construct new buildings in their place. The previous construction rights are preserved, and new rights that have been approved as part of national outline plan #38 are added. During the time when the tenants are forced to find an alternative living place, they have the right to receive compensation that covers at least the expenses of living elsewhere. Naturally, Pinuy Binuy by national outline plan #38 entails more costs than strengthening an existing building. Nevertheless, the plan is considered lucrative mainly in cases when conducting a Pinuy Binuy project has already been decided upon. The reason for this is that, while receiving a permit for a “regular” Pinuy Binuy project takes approximately five years on average, receiving a permit for a Pinuy Binuy project by national outline plan #38 takes up to a year on average. Accordingly, the plan may be considered attractive enough to carry out in many cases.
WHAT IS THE JOB OF A LAWYER IN PINUY BINUY PROJECTS BY NATIONAL OUTLINE PLAN #38?
Entrepreneurs in Pinuy Binuy projects must always be aided by a lawyer to ensure that they are acting in accordance with the requirements of the law and that their rights and interests are protected. Since the interests of each of the parties are very different from each other, it is extremely important to hire legal representation for the tenants of the building before carrying out the Pinuy Binuy project. It is recommended to appoint representatives among the tenants and locate a lawyer who will represent all apartment owners before officially signing the contract with the entrepreneur. It is important to be aware that, although the tenants may pay for the representation themselves, it is common practice for the entrepreneur to take on the representation fees.
The lawyer representing the apartment owners in a Pinuy Binuy project has the job of protecting the tenants’ interests during the negotiations with the entrepreneurs, and attempts to gain the best return for their money in this transaction. During the negotiations, the lawyer provides advice regarding whether the contract abides by the law and whether it optimally protects the interests of the apartment owners. After the contract is signed, the lawyer provides legal assistance to the tenants throughout the process of obtaining approval for the project from the planning and construction committee and throughout the process of realizing the project.
It is important to remember to reach an agreement with the entrepreneurs even before the project is approved. Accordingly, there is much uncertainty regarding what the apartment owners will receive if things don’t work out. Therefore, the lawyer must arrange various surety bonds in accordance with the Sale (Housing) Law to ensure that the rights of the tenants are protected even if the apartment that was promised to them is not transferred to them on time or ever, and the lawyer keeps these surety bonds in a mutual fund. If there are apartment owners who unjustifiably refuse to move forward with the project, the lawyer may ensure that the project will be realized anyway, including by filing a claim at court. The lawyer may also ensure later on that the project is carried out in accordance with the law and that the contractor fulfills all of the obligations that appear in the contract. If the contractor does not do so, the lawyer may take legal action against the contractor on the grounds of deficiencies. Finally, the lawyer may help to register the tenants’ rights to the new apartments in the land registry deed (called the Tabu).
PINUY BINUY BY NATIONAL OUTLINE PLAN #38—CONTACT A LAWYER WHO SPECIALIZES IN THE LAWS OF REAL ESTATE AND URBAN RENEWAL
In this article we have elaborated on Pinuy Binuy projects by national outline plan #38 and the job of a lawyer who represents the tenants in such projects. If you have any questions or need help, the lawyers at our firm are at your service. With branches in Jerusalem and Tel Aviv, we specialize in real-estate law and assist apartment owners with Pinuy Binuy and urban renewal projects vis-à-vis the land supervisor’s office, the land registry offices, and the courts. You can contact us via the phone numbers or email address listed below.