Calcalist, Shlomit Tzur, 30.03.2021
The government is tightening the conditions that developers must meet before tenants sign eviction-construction agreements. As part of amendments to the Law Encouraging Evacuation and Construction Projects formulated by the Urban Renewal Authority, recently signed by Housing Minister Yaakov Litzman, developers will be required to significantly increase transparency in the contracting phase with apartment owners in designated complexes. Non-compliance with the regulations could lead to the cancellation of tenants' signatures on eviction-construction agreements. The regulations are awaiting the signature of Justice Minister Bnei Gantz, and will take effect immediately upon his signing, but will not apply retroactively.
In May 2020, the Urban Renewal Authority issued regulations for the public review of regulations to encourage the Evacuation-Construction Projects Law, the purpose of which is to prevent apartment owners from signing urban renewal transactions without them understanding their meaning. Regulations required developers to hold meetings with apartment owners to give explanations and details about the planned project and prevent individual pressure on tenants to sign agreements; And to provide tenants with a document with the main points of the proposal two weeks before the conference.
A residential building in Tel Aviv intended for evacuation-construction. "A balance between the need to protect the rights of tenants and the need to promote eviction-construction effectively"Photo: Amit Shaal
Following the publication of regulations for public comments in May 2020 and consultation with professionals, including the Ministry of Welfare, Litzman signed amendments to regulations that tighten the conditions that developers must meet, to increase the protection of homeowners and the chances of successful implementation. One of the changes is to increase the minimum percentage of participants in the meeting from 20% to 40% of the apartment owners, and to allow the developer to hold another conference if 40% of the tenants did not participate in the first conference. This is to increase the proportion of tenants who participate in the two conferences together to at least 30%.
Another change is the possibility of holding zoom meetings at the request of 20% of apartment owners, in view of the practice of the past year, and to allow apartment owners who do not live near the property, including abroad, to attend the conference. Who do not speak Hebrew, but Arabic, Russian or Amharic, as well as a translation of the minutes of the meeting.
It was further stipulated that the developer must present to the apartment owners what his experience is in the field, what projects he has carried out in the last decade, at what addresses, the actions he has carried out himself in each of the projects and at what stage each of the projects is. In addition, he has a duty to present what legal proceedings have been conducted or are being conducted against him or against another controlling shareholder, including proceedings.Bankruptcy, Liquidation, freezing of proceedings or Foreclosure, As well as decisions made regarding the developer by the Tenant Inquiries Commissioner of the Urban Renewal Authority. The developer must also specify whether he or the controlling shareholder has a personal interest in the project, such as ownership of the apartment in the complex, and whether one of the apartment owners in the complex is acting on his behalf. Another essential clause in the new regulations is the expiration date of the engagement agreement that the developer will present to the apartment owners.
"We believe that the regulations need to be updated to allow for a proper balance between the need to protect the rights of the tenants and the need to promote evacuation-construction transactions effectively," wrote Einat Ganon, deputy director of the Urban Renewal Authority. "The purpose of the regulations is to prevent apartment owners from signing transactions without them being aware of the significance of the transactions and their main points," the explanatory memorandum to the regulations states.
At the same time, the Ministry of Justice yesterday issued a memorandum of publicity for a bill aimed at encouraging evacuation-construction projects, and among other things, it states that the majority needed to carry out a project will be reduced from 80% to 66% of apartment owners.