Realizing an Apartment Pursuant to a Family Court Judgment

What is Realizing an Apartment Pursuant to a Family Court Judgment?

Realizing an apartment pursuant to a family court judgment is a legal process that occurs when a family home (typically held by spouses undergoing divorce or separation proceedings) was owned as a jointly held asset, and the court orders the dissolution of the co-ownership and division of the property or its sale. The court judgment determines each party's rights, the manner of sale, the division of proceeds, and the conditions pertaining to the execution of the process.

In our practice at Mandelbaum, Gaur, Weizman-Gaur & Co., specializing in family law and civil-commercial matters (based in Ramat Gan), we guide clients through every stage of this process — from initial legal consultation, through filing the claim with the court, to implementation of the judgment and actual realization of the apartment.

Why Does Apartment Realization Become Necessary?

When spouses or family partners decide to separate or when there are substantial disagreements regarding the fate of a jointly held apartment, it is not always possible to agree on a solution satisfactory to both parties. In such situations, one party may file a claim with the court to determine its rights in the property and request a forced sale or partition dissolution. Such a judgment is binding on both parties without mutual consent.

The need for apartment realization also arises when one party refuses to cooperate, delays the sale process, or attempts to use the apartment as leverage in a more complex family proceeding. In such cases, the court is authorized to order a forced sale under the supervision of a trustee or property administrator.

The Main Stages in the Apartment Realization Process

• Filing a Claim with the Court: One party files a claim to determine its rights in the property and request partition dissolution. In divorce cases, this claim may be part of a broader divorce proceeding. An experienced attorney will ensure proper drafting of the claim and filing in accordance with legal requirements.
• Evidence and Hearing Stage: Both parties present evidence, documents, and legal arguments. At this stage, it is typically determined who owned the property before marriage (or the relationship), how much each party contributed to the purchase and maintenance, and whether there is a prenuptial agreement or other agreement governing property rights.
• The Court Judgment: The court determines each party's rights in the property. The judgment may order a forced sale, division of ownership, or that one party purchase the property from the other in consideration of a sum determined by the judgment.
• Execution of the Judgment: After the judgment, an application for enforcement must be filed if one party refuses to comply. Typically, the property is sold through a public auction or private sale under the supervision of a trustee or property administrator appointed by the court.
• Division of Proceeds: After the apartment is sold, the proceeds are divided according to the judgment, after deduction of mortgage debts, taxes, sales commissions, and legal costs.

Family Partnership Dissolution — Differences and Complexities

Family partnership dissolution is a legal term describing the process of executing a court judgment that orders the forced sale of a property owned jointly. In legal Hebrew, this is sometimes called "partnership dissolution" or "forced sale". This process differs from a mutual agreement between parties to sell the property, as it binds both parties even if one of them objects.

In the case of divorce or separation, family partnership dissolution is often part of the overall financial settlement. The court not only determines each party's rights to the apartment, but also to other assets, cash, debts, and other liabilities. Sometimes, one party will receive other assets in exchange for waiving their share in the apartment.

The procedure is particularly complex when:

• There is a mortgage on the property — coordination with the bank is required regarding the provision of the property as security for the forced sale and deduction of the debt from the proceeds.
• One party lacks the financial ability to purchase the other party's share — forced sale is sometimes the only solution.
• There are children in the marriage — the court may order that one parent remain in the apartment with the children for a certain period, and only then the forced sale will be executed.
• The property has significant value — disputes over valuation and division of proceeds can be complicated and require deep legal and financial assessment.

Forced Sale — What is the Actual Process?

Forced sale is the practical implementation of the court judgment. After the court determines that the property will be sold, the method of sale must be chosen. Generally, there are several options:

• Private sale by agreement: If both parties agree on a buyer and price, the property can be sold privately faster. Even in this case, court guidance and precise implementation of the judgment terms are necessary.
• Public auction: Usually, when one party refuses to cooperate or when no agreement is reached on price, the court orders a public auction. The property is offered to the general public, and the highest bidder wins the property.
• Property manager: The court appoints a property manager or representative responsible for executing the sale, coordinating with the bank, receiving offers, and implementing the terms.

The parties cannot influence the choice of buyer, but they can raise objections to the sale terms or fees charged.

Comparison Table — Different Scenarios in Family Partnership Dissolution

Costs and Expenses in the Property Realization Process

It is important to understand that the property realization process does not come without costs. Below is an overview of typical expenses:

• Legal fees: Attorney's fees, office expenses, and court filing costs. Generally, the court may order each party to bear its own costs, or certain costs may be divided according to the judgment.
• Sales commissions: When a property is sold through an auction or through a real estate broker, commissions apply. Typically, these range from 1–3% of the property value, but this may vary.
• Bank costs: If a mortgage exists, there are costs for early mortgage repayment, management fees, and interest charges on part of the period.
• Registration and land registry fees: Updating property registration in the land registry, issuing a new certificate of title, and paying registration fees to the Registrar of Properties.
• Taxes: Purchase tax (if the property changes hands), appreciation tax (upon sale), and additional taxes depending on income from the sale.
• Property manager costs: If the court appoints a property manager, management costs are charged from the proceeds.

Generally, this amount can reach 10–20% of the property value, but this depends on the specific circumstances of the case.

Rights of Parties in Apartment Realization Proceedings

Each party in an apartment realization proceeding pursuant to a family court judgment is entitled to certain legal rights. Understanding these rights is essential for protecting your interests:

• Right to be heard in court: You are entitled to present your claims, evidence, and arguments before the court. You can raise objections to the other party's claims and request examination of evidence.
• Right to review the file: You are entitled to review all documents in the file, including property valuations, bank documents, and claims made by the other party.
• Right to appeal the judgment: If you believe the judgment is incorrect or unjust, you can file an appeal within 30 days of publication of the judgment. With an experienced attorney in legal appeals, you have a better chance of success.
• Right to legal representation: You are entitled to be represented by an attorney at all stages of the proceeding. If you cannot afford an attorney, you can apply for free legal aid under certain conditions.
• Right to sue the other party for costs: If the other party acted in bad faith or in an unfair manner, you can sue them for additional legal costs.
• Right to monitor enforcement of the judgment: You can request that the court monitor whether the other party complies with the judgment. If they do not comply, you can file a request for execution.

Case Study — Apartment Realization in Divorce Proceedings

An example of a typical case we handle in our family law practice:

Background: A married couple with two children aged 8 and 11 decided to separate. They purchased an apartment valued at approximately 2 million shekels in 2015. The apartment has a mortgage of 800,000 shekels. Both parties contributed to the purchase, but in different proportions. The first party (with higher income) contributed 70%, and the second party contributed 30%.

The Problem: The parties could not agree on their rights in the apartment. The first party wanted the second party to purchase their share, but the second party did not have the financial capacity to do so. Additionally, the second party wanted the children to remain in the apartment until the completion of elementary school, and only then would the apartment be sold.

The Solution: We filed a lawsuit in court on behalf of the second party. During the proceeding, we presented evidence of the second party's contribution, the needs of the children, and the second party's inability to purchase the share. The court determined that the apartment would remain with the second party until the children complete elementary school (approximately 5 years), after which it would be sold. The first party would receive 70% of the proceeds (after deducting the debt), and the second party would receive 30%. Additionally, the court determined that the first party would pay a monthly allowance to the children and the second party for maintenance.

Our Firm's Experience: In this process, our firm protected the rights of the second party, safeguarded the rights of the children, and achieved a fair financial arrangement. Today, 5 years after the judgment, the apartment is planning to be sold, and the proceeds will be distributed in accordance with the judgment.