12 Practical Tips and Tricks for Rental Contract Negotiations in Israel
You are about to rent an apartment. A person purporting to represent the landlord presents you with a single sheet of paper and shows you where to sign on the dotted line (“it’s just standard wording,” he assures you). What should you look out for to protect your interests?
1. Proper power of attorney and absentee landlord
First, insist on seeing an original Power of Attorney document, to verify that the agent has actual authority to sign a rental contract with you on behalf of the landlord. This should be notarized, and if obtained outside of Israel also apostilled.
Check who will be your reference point if any repairs need to be effected during the term of your lease. Remember that you do not want to have to be dealing remotely, via an absentee landlord, who may be 7-10 hours distance away from you, especially in the case where urgent repairs may be required. A property manager or agent in Israel is therefore vital.
2. Property inspection before signing lease
Prevention is better than cure: especially if the apartment is old (and in particular if you plan on living in it for more than a few months), consider undertaking a property inspection through a reputable engineer. Points to check include the presence or likely appearance of mold/dampness (retivut) on the walls, any leaky taps/toilets (you will be responsible for paying the water bills), whether the fuse box is capable of bearing all of your appliances, etc. It is recommended to list and even photograph the apartment and furnishings (e.g. if a hinge on the door of a cabinet is not working) before entering it, to avoid arguments (and attempts to forfeit your security check) at the end of the tenancy period, over whether you have restored the apartment and any furnishings in it to the state it was in at the time you moved in.
3. E-mail as valid form of communication
Especially in the case of an absentee landlord, make sure the contract includes a clause stating that e-mail is a valid means of communication between the parties, and including the parties’ e-mails for this purpose.
4. Rent in advance
Try to avoid paying more than 1 month’s rent in advance. Request a 7 day grace period which allows you to pay rent within 7 days of the contractual due date without breach of contract.
5. Option-to-renew
If you think you may be interested in continuing the tenancy for 1 further year (or longer), you should request that an option-to-renew clause be inserted in the agreement. This will enable you to continue to rent the apartment on the same terms – including at the same rent, or at a rent to be increased by ___% – provided you do not breach the terms of the rental agreement during the initial rental period. This arrangement will often be beneficial to the landlord too, because it saves him the heartache of having to find an alternative tenant, including, possibly, time during which the apartment may go unrented, and including the cost of advertising for a new tenant. In addition, if a mechanism for increasing the rent is already inserted into the original contract, the contract can be renewed automatically, without the need for further lawyer’s fees, etc.
6. Premature termination of lease
If the contract stipulates that the landlord has the right to give ___ days to terminate the lease prematurely, the tenant should insist on being given the same amount of time to break the lease should this prove necessary. If the lease is for a defined term (e.g. 1 year), try and get out of the need to find a suitable alternative tenant for the remainder of the term, in the event that the lease requires premature termination (e.g. after trying for a maximum period of two months). If you are required to find a replacement tenant “suitable to the landlord,” be sure to qualify this with the words: “provided that the landlord shall not unreasonably refuse his consent to such alternative tenant.”
7. Payment of expenses (Arnonah, water, Va’ad Bayit)
In terms of paying expenses – the tenant should only be responsible for usual expenses and regular Va’ad Bayit (Building Maintenance Committee) costs, not for building repairs or improvements/renovations (installing an Intercom system or fixing a lift in the building, replacing a solar heater on the roof, etc). Arnonah, the municipal tax on the apartment, can be high (it includes the water bill), so be careful to ask how much you will have to pay in advance (although as an Oleh Chadash you are entitled to a discount of up to 90% on the bill for the first year, on presentation of your lease to the Iriyah-Municipality). Arnonah is payable according to the number of rooms and amount of space in the apartment – hence it is important for the contract to make clear if one room is closed to you by the landlord. You should also inquire in advance as to how much you will have to pay monthly to the Va’ad Bayit of the building (if there is no Va’ad Bayit, you will be responsible for performing your share of the upkeep of the common parts of the apartment building).
8. Maintenance of property
You should likewise be responsible only for repairs caused by your use of the property – not for fair wear and tear. The contract should be formulated in such a way as to make it clear that the renter is responsible only for repairs above and beyond what is normal usage, and that the owner is responsible for all other repairs (such as structure, wiring/fuse box, and dampness/plumbing).
9. Insurance
You should insure your own belongings, while the landlord should insure property and contents belonging to him. Of course, there are always those landlords who will try and roll over part or all of their building insurance premiums to their tenant, on the ground that the tenant’s own contents insurance would not always cover third party liability (e.g. if a guest or child slips on the floor while the tenant is cleaning for Shabbat, and then sues the tenant for his injuries).
10. Security deposit
It is normal to be required to give some form of security deposit. If a personal check is given, you should write on the check hamcha’at bitachon bilvad – lo sachir, clarifying that the check is for security deposit only and is not negotiable. A undated blank check might be asked for by the landlord, in which case the lease should state by whom the check will be held and clear terms as to the conditions under which the check should be cashed and when it will be returned to you. Whether or not you are required to provide a promissory note (shtar chov) and one or more guarantors (areivim) often depends on how good a negotiator you are! If a shtar chov has to be given, it should be limited in amount (at a level of no more than 3 months’ rent, especially when the rental term is not for many years and where the apartment and furnishings are not in mint condition). A demand to furnish a bank guarantee (areivut bankait) in particular should generally be resisted by the tenant, as it both costs money for its issue and locks up with the bank the amount on the guarantee; in addition, the landlord can cash it in without giving any notice to the tenant. Obviously, from a tenant’s point of view, the less security he needs to give the better and easier for him (especially as it may be near impossible for a new immigrant to provide a guarantor, let alone two).
11. Signing of contract
Finally, every hand-written change to the lease should be initialed by both parties. Likewise, the parties should initial at the bottom of every page of the contract, with their full signature on the signature page.
12. Concluding remark
In general, remember: standard rental contracts in Israel tend to be very landlord-weighted, and you should not be afraid to negotiate the points therein! That said, it goes without saying that even negotiations need to be undertaken in a fair and balanced manner – otherwise, you run the risk that the landlord will not want to take you as his tenant if he gets the impression that the entire tenancy will involved him in a negotiation match…
For further advice on rental contracts, feel free to contact Simon on 0737-40-60-40 / 0545-742-374 / [email protected]
