Amidar tenant's lawsuit to purchase house in a combination deal rejected
The Jerusalem District Court has rejected a lawsuit filed by a public housing tenant seeking to purchase his home through a combination deal with a private developer. The court upheld the Ministry of Construction and Amidar's position, citing the need to prevent the commercialization of public housing rights.
A tenant living in public housing managed by Amidar sued the Ministry of Construction and Amidar to allow him to purchase an apartment as part of a combination deal with a developer, but his lawsuit was recently rejected by the Jerusalem District Court. In its decision, the court adopted the position of the defendants.
The tenant is a disabled person living on a National Insurance Institute allowance and residing in a ground-level house in Mevaseret Zion, which has been recognized as public housing for over 50 years. His parents lived in the house as public housing tenants, he grew up there with his siblings, and remained living there after his parents passed away. In 2014, the tenant submitted a request to purchase the property, and after legal proceedings that lasted for years and even reached the Supreme Court, it was determined in March 2022 that Amidar would allow the sale of the house for 3.35 million shekels.
According to the tenant, he was unable to raise the amount, as he lives on a National Insurance allowance, cannot obtain a mortgage of that size, and his family is also unable to assist him with such sums. The tenant approached a family friend who works in real estate development, and he agreed to finance the full purchase price, but not as a loan, rather through a combination deal framework. The property in Mevaseret Zion is built on a plot with rights for 6 apartments. The framework proposed by the tenant was to purchase the house from Amidar and immediately thereafter enter into a combination deal with the developer and transfer 80% of his rights in the property to him. 20% would remain in his hands, and as part of the project, he was supposed to receive a new residential apartment.
To execute the deal, he requested that Amidar allow the developer to receive collateral on the property, and simultaneously prevent or reduce the collateral that the state requested to register in its favor as part of the sale of the public housing apartment. For a long period, the request was discussed between Amidar, the Ministry of Construction and Housing, and the Exceptions Committee, and during this period he was granted several extensions to complete the purchase, including approval to finance the purchase through a loan from an external regulated body.
In July 2025, Amidar announced that the framework he proposed was rejected. The state's position was that financing the purchase of a public housing apartment can be done through a bank or a recognized and regulated financial body, but not through a private developer who is not a regulated financial body and who demands to receive collateral and rights in the property in return. The tenant appealed the decision to the Jerusalem District Court.
The court rejected the tenant's lawsuit and sided with the position of Amidar and the Ministry of Construction. In his decision, Judge Arnon Darel wrote that deviation from administrative guidelines is reserved for unique and highly exceptional cases, but in this case, the Exceptions Committee concluded that the circumstances of the case, despite its uniqueness due to the nature of the property, do not justify a deviation from the provisions of the procedure and the law.
"Despite the understanding of the difficulty and the desire to allow the petitioner to purchase the apartment, I did not see that there is a cause for intervention in the discretion of the Exceptions Committee in this matter," wrote Judge Darel. "The respondents clarified at the hearing that the fear of allowing external financing, while the state waives the collateral, could lead in the future to commercial activity with public housing rights, taking loans from unauthorized parties, and exploiting the needs and distress of the public housing tenant in order to use his right in a way that others can reap profits for themselves," the verdict stated.
According to the judge, "Expanding the possibility of external financing will allow raising funds from private developers without the ability to supervise it and will expand the circle of cases in which transactions will be made with the rights of tenants in public housing, which were not intended to promote the goal underlying the possibility given for purchasing the apartments." The judge also wrote that the purchase in the requested framework resembles a Pinui-Binui (evacuation and construction) deal in which a developer steps into the tenant's shoes, provides him with financing, and reaches an arrangement with him for building several housing units, so that the tenant receives one apartment and the developer enjoys the rest.
"The committee's position not to deviate from the rules, and not to waive the right to receive a mortgage or a cautionary note, is consistent with the purpose of the procedure and the law. This purpose requires ensuring that this benefit is given only to those who need it and does not become a matter that can be traded," the decision stated.
