What the Law Actually Requires: The 66% and Its Layers
The November 2023 Arrangements Law changed the rules: the required consent threshold for initiating a pinui-binui project was lowered from 80% to 66% of all apartment owners in a complex. But this number is more nuanced than it first appears — it is a multi-layered majority requirement.
The law simultaneously requires: two-thirds of all apartments across the entire complex, three-fifths of apartments in each individual building, and a majority of the common property in each building. This means that even if 85% of the entire complex has agreed, a single building where a minority of owners hold out can still block the entire project.
- 66% of all apartments across the complex — the aggregate threshold
- 3/5 of apartments in each individual building — must be met building by building
- Majority of common property in each building — an additional consent layer
- 66% enables planning advancement but not physical evacuation — that requires 100% or a court ruling
Who Is a Stubborn Objector — and What Rights Do Objectors Have?
Not every resident who declines to sign is a legally stubborn objector (dayer sarvan). The law recognizes that there can be legitimate reasons to refuse a deal, and defines specific circumstances in which refusal is considered reasonable and legally protected.
Refusal is considered reasonable when: the project is not economically viable for that owner; no alternative housing was offered for the construction period; no adequate bank guarantees were provided by the developer; special personal circumstances exist such as serious illness; or if the resident or a household member has a disability and the alternative housing offered is not accessible.
- Reasonable refusal: project unviable, no guarantees, no alternative housing, documented personal hardship
- Unreasonable refusal: objecting without justification, or demanding disproportionately higher compensation
- Age 70+: elderly residents qualify for additional compensation and special developer obligations
- Residents attorney must be involved — they verify fairness of the deal before signing
Legal Remedies Against Unreasonable Objectors
When a resident unreasonably refuses, two main legal tools are available: tort damages lawsuits and court-appointed trustee mechanisms. In a landmark ruling from the Tel Aviv District Court, three objecting residents in Herzliya were each ordered to pay 2.6 million NIS to their neighbors.
The trustee mechanism allows a court to appoint an attorney or accountant to sign the agreement on behalf of the objecting resident. This tool was added to the law in Amendment 6 in 2018, and allows a project to proceed without the objector direct consent.
- Tort lawsuit: fellow residents sue the objector for financial damages caused by delay
- Precedent: 2.6 million NIS per objector — each year of delay increases the potential damages
- Court-appointed trustee: signs the agreement on behalf of the objector by court order
- Trustee appointment requires: advanced project stage with an approved detailed plan (taba)
What Consenting Owners Receive — and Why It Is Worth It
In a typical pinui-binui project, apartment owners receive a new apartment that is larger than their current one (an average addition of 12 sqm), plus parking, storage, and a balcony. The developer is also legally required to provide a bank guarantee covering rent payments for the entire construction period.
Apartment owners benefit from capital gains tax exemption on the appreciation generated by the transaction, up to 150% of the original apartment value — meaning the vast majority of owners pay zero tax.
- New apartment with additional floor area (avg. 12 sqm) + parking + storage + balcony
- Bank guarantee covering rent for the entire construction period — a mandatory developer obligation
- Capital gains tax exemption up to 150% of original apartment value — a major tax benefit
- Developer funds double moving costs and pays residents legal representation fees