Housing Company vs. Tabo — What's the Difference?

Introduction: Why Understanding the Difference Between Housing Company and Tabo is Important

When you purchase an apartment or property in Israel, you may encounter two different legal concepts: housing company and tabo. Both terms relate to the registration of property rights, but they differ fundamentally in their legal meaning, implications for your rights as an owner, and the process of property transfer. A clear understanding of these differences is essential to protect yourself as a buyer, seller, or person with property rights.

In this guide, we will review in detail the legal differences between housing company and tabo, explain the rights and obligations associated with each, and outline the practical implications for real estate transactions. Whether you are in the process of purchasing, selling, or urban renewal, or if you are a tenant in a shared building in a renewal project, this information can save you from costly mistakes.

What is a Housing Company? Definition and Legal Authority

A housing company is a legal organization that represents a group of apartment owners in a shared building. It is typically established when a building is constructed or when a group of apartments reaches a state where shared management of the common property is required (such as a roof, elevator, boiler room, or common courtyards). The housing company is a legal entity with independent legal personality, capable of holding common property on behalf of all apartment owners collectively.

Apartment owners are not direct owners of the common property; instead, they own their specific apartment and hold rights in the housing company. The housing company is managed by a general assembly of apartment owners, a chairperson (or director), and often also a professional property manager. The company is responsible for maintaining the common property, collecting maintenance fees from residents, and performing necessary repairs and replacements.

A housing company typically registers with the Land Registry Office, and apartment owners receive ownership certificates for their apartments. The common property itself appears in the tabo of the shared building, but each apartment owner's right is a housing company right — that is, a right of ownership in the company, not direct ownership of the property.

What is Tabo? Definition and Legal Authority

Tabo (short for "tabo ownership certificate") is an official registration of property ownership in the state land registry in Israel. Tabo is the primary and strongest legal document evidencing the right of ownership in a specific property. Every property (whether an apartment, house, land, or store) that has legal registration in Israel is registered in tabo.

In tabo, your name (or the name of the legal entity) appears as the direct owner of the property. This means you have absolute ownership rights in the property, subject to any liens, mortgages, or other rights registered on the property. Tabo is a public document that can be viewed by anyone at the Land Registry Office and serves as strong evidence of ownership.

Unlike a housing company, tabo typically refers to a single specific property — for example, a particular apartment in a shared building or private land. If you purchase an apartment in a shared building that is already registered in tabo, you can be registered as the direct owner of your apartment in a separate tabo.

The Key Differences Between a Housing Company and Taboo

Now that we understand the definition of each concept, let us review the substantive differences:

1. Who is the Owner — Direct Ownership vs. Company Rights

In Taboo, you are the direct owner of the property. Your name appears on the Taboo as the owner, and your rights are protected by the Property Law and the Land Registration Law. In a housing company, on the other hand, you own only your apartment, not the shared property. The shared property (roof, elevator, boiler room, etc.) belongs to the housing company itself, and you own a right in this company. This means you hold an indirect right to the shared property through the company.

2. Registration Status — Taboo Certificate vs. Housing Company Registration

When you purchase a property registered in Taboo, you receive a Taboo certificate (an official copy of the Taboo) in your name. This certificate is strong legal evidence of your ownership. In a housing company, you receive a certificate of ownership in the housing company, which evidences your rights in the company, but not direct ownership of the shared property.

3. Real Estate Transactions — Transfer and Supervision

When you want to sell a property registered in Taboo, the transfer is relatively simple: you sign a purchase agreement, pay the required taxes (purchase tax, capital gains tax), and transfer the property to the buyer. The Taboo certificate is updated at the Land Registration Office.

In a housing company, the process is more complex. When you buy or sell an apartment in a shared building that has a housing company, you must obtain approval from the housing company (usually through a general assembly), and often you must meet certain conditions (such as payment of maintenance fees in arrears). Additionally, you may need to execute additional agreements with the housing company or with other apartment owners.

Detailed Comparison: Differences Table

When to Use a Housing Company and When to Use Tabu

Housing Company — When to Use It

A housing company is primarily used in situations where there is a need for joint management of a property by multiple owners. Common examples:

• Multi-unit shared buildings: When there are multiple apartments in one building and there is a need for joint management of shared properties (roof, elevator, boiler room, courtyards).
• Urban renewal projects (TAMA 38): In urban renewal projects where new apartments are built in exchange for old apartments, a housing company is often used to manage the new shared property.
• Complexes with shared services: When there are shared services such as a swimming pool, gym, or shared shops.

Tabu — When to Use It

Tabu is used for registering direct ownership of a property. Common examples:

• Private houses: When you purchase a private house or villa, the property is registered in Tabu in your name.
• Apartments in shared buildings (direct ownership): In some cases, an apartment in a shared building can be registered in Tabu in your name as direct ownership instead of through a housing company.
• Private land: Private land is registered in Tabu in the names of its owners.
• Commercial properties: Shops, offices, and studios are typically registered in Tabu in the names of their owners.

Rights and Obligations of Apartment Owners in a Housing Company

Rights of Apartment Owners in a Housing Company

As the owner of an apartment in a housing company, you have several rights:

• Right to reside in your apartment: The right of ownership in your apartment and use it as you wish (subject to laws and agreements).
• Right to participate in decisions: The right to participate in the general assembly of the housing company and vote on decisions concerning the management of the common property.
• Right to financial reporting: The right to receive financial reports from the housing company and know how the company's funds are managed.
• Right to legal action: The right to file a lawsuit against the housing company or against other apartment owners if they violate your rights.

Obligations of Apartment Owners in a Housing Company

As the owner of an apartment in a housing company, you also have obligations:

• Payment of maintenance fees: The obligation to pay monthly maintenance fees to the housing company, which are used for the maintenance of common property.
• Compliance with regulations: The obligation to comply with the regulations of the housing company, which include rules regarding the use of common property, noise, pets, and so forth.
• Contribution to major repairs: Often, when major repairs or replacements are needed (such as roof replacement or elevator replacement), apartment owners are required to contribute funds for the work.
• Participation in assemblies: Apartment owners are expected to participate in general assemblies of the housing company and stay informed about decisions concerning the property.

Rights and Obligations of Property Owners in the Land Registry

Rights of Property Owners Registered in the Land Registry

As the owner of a property registered in the land registry, you have strong and comprehensive rights:

• Right of absolute ownership: The right of full ownership in the property, including the right to use it, lease it, or sell it.
• Right to use the property: The right to use the property for any lawful purpose you choose (with some exceptions, such as conducting illegal construction).
• Right to sell or transfer: The right to sell the property or transfer it to another person, subject to laws and related agreements.
• Right to income: The right to receive income from the property (for example, rental fees if you lease the apartment).
• Strong legal protection: The land registry document serves as strong evidence of your ownership, and it is difficult for others to dispute your rights.

Obligations of Property Owners Registered in the Land Registry

As the owner of a property registered in the land registry, you also have obligations:

• Payment of taxes: The obligation to pay purchase tax (when purchasing the property), appreciation tax (when selling the property), and annual property tax (in accordance with local laws).
• Maintenance of the property: You are responsible for maintaining the property in reasonable condition.
• Compliance with laws: You must comply with all laws applicable to the property, including building laws, planning and construction laws, and other applicable laws.
• Non-infringement of others' rights: You cannot use the property in a way that infringes the rights of another person (for example, non-infringement of neighbors' rights).

Transfer Process to Taboo — How to Transfer from a Mortgage Company to Taboo

In recent years, there has been a trend in Israel to transfer properties from registration with a mortgage company to registration in the Taboo (land registry). This occurs primarily in urban renewal projects, where owners of old apartments receive new apartments. In some cases, owners of new apartments wish to obtain direct ownership in the Taboo instead of a right in a mortgage company.

Process Steps

1. Agreement of apartment owners: Usually, agreement of the majority of apartment owners (or all apartment owners, depending on the mortgage company's bylaws) is required to transfer the property from a mortgage company to the Taboo.

2. Dissolution of mortgage company: To transfer the property to the Taboo, the mortgage company must be dissolved. This requires submitting a request to the Land Registry Office, together with documents evidencing the agreement of all apartment owners.

3. Registration in Taboo: After dissolution of the mortgage company, each apartment owner can register their apartment in the Taboo in their name as direct owner. This process requires submitting a request to the Land Registry Office, together with documents evidencing ownership (such as a purchase agreement, agreement of previous owners, etc.).

4. Payment of taxes: Upon registration in the Taboo, there may be taxes and fees that apartment owners must pay (such as purchase tax or registration fees).

Advantages of Transfer to Taboo

• Direct ownership: The apartment owner becomes the direct owner of the property, without the involvement of a mortgage company.
• Full control: The apartment owner can decide freely how to use their apartment.
• Easier sale: Selling a property registered in the Taboo is generally simpler than selling an apartment in a mortgage company.
• Stronger legal protection: Ownership in the Taboo provides stronger legal protection than a right in a mortgage company.

Challenges in Transfer to Taboo

• High costs: The transfer process may be expensive, including taxes, registration fees, and legal fees.
• Agreement of all parties: Usually the agreement of all apartment owners is required, which may be difficult to obtain.
• Legal issues: If there are legal issues regarding property ownership (such as mortgages or claims by third parties), the transfer may be complicated.

Practical Cases — Examples of Use of Mortgage Company and Taboo

Example 1: Purchase of an apartment in a shared building with a mortgage company

David purchased an apartment in a shared building in Tel Aviv. The shared building is registered as a mortgage company at the Land Registry Office. David received a certificate of ownership in the mortgage company, evidencing his rights in the company. Every month, David pays maintenance fees to the mortgage company, which are used for maintenance of shared property (roof, elevator, utility room). When David wants to sell his apartment, he must first obtain approval from the mortgage company, and then transfer the certificate of ownership to the new buyer.

Example 2: Purchase of an apartment in a shared building with Taboo registration

Sarah purchased an apartment in a shared building in Jerusalem. The apartment is registered in the Taboo in her name as direct ownership. Sarah receives a Taboo extract evidencing her ownership of the apartment. When Sarah wants to sell her apartment, she can do so directly, without the need for approval from a mortgage company or other apartment owners. The process is simpler, and the Taboo extract serves as strong evidence of her ownership.

Example 3: Urban renewal project (TAMA 38)

The Cohen family received a new apartment in an urban renewal project under TAMA 38 in Tel Aviv. Initially, the apartment is registered as a mortgage company together with other apartments in the project. After several years, the apartment owners decided to transfer the property to the Taboo. The Cohen family submitted a request to the Land Registry Office, and after several months, their apartment is now registered in the Taboo in their name as direct ownership. This gave them full control over the apartment and the ability to sell it more easily.

How Mendelbaum, Gor, Witzman-Gor & Co. Can Help You

In real estate transactions, housing companies, and land registry matters, there are several critical stages where proper legal counsel can save you from costly mistakes. Our firm, Mendelbaum, Gor, Witzman-Gor & Co., Attorneys at Law, specializes in real estate and property law, and our portfolio includes dozens of real estate transaction cases, urban renewal projects, and housing company management.

We offer:

• Complete Legal Counsel: Detailed explanation of your rights and obligations in a housing company or land registry matter, including discussion of the legal implications of each matter.
• Contract Review: In-depth examination of the purchase agreement, contracts, and any other legal documents related to your transaction.
• Transaction Representation: Full representation throughout the process of purchasing or selling your property, including coordination with the Land Registry Office.
• Housing Company Matters: Representation in issues related to housing companies, including disputes with the company or other apartment owners.
• Free Initial Consultation: We offer a free initial consultation meeting, where we can discuss your matter and propose solutions.

Our office is located in Ramat Gan and also in Petach Tikva. We provide personalized and dedicated service to each client, helping them understand their legal situation and make informed decisions.