Guide to TAMA 38/2 Agreement: Demolition and Reconstruction

What is TAMA 38/2 and How Does It Affect Tenants

TAMA 38/2 (Outline Scheme 38/2) is a legal instrument in Israel that regulates urban renewal projects, demolition and reconstruction of residential buildings in cities. The scheme allows tenants in a property designated for demolition to remain part of the urban improvement process while protecting their legal rights. However, this process is complex and requires a deep understanding of the agreements, compensation, alternative housing and additional arrangements that apply to each tenant.

For more than 18 years, Mandelboim, Gor, Witzman-Gor & Co. law firm, headed by Attorney Keren Mandelboim, has guided tenants and contractors in urban renewal projects throughout the country. Our experience in real estate and property law enables us to provide comprehensive and focused legal advice on tenant rights, legal requirements and rightful compensation at every stage of the project.

Key Definitions in TAMA 38/2 Agreement

To understand your rights as a tenant in a demolition and reconstruction project, it is important to familiarize yourself with the key legal terms:

• Tenant Owner – an apartment owner or long-term tenant (holder of ownership rights) in a property designated for demolition. The tenant owner is entitled to alternative housing during construction and a new apartment upon completion of construction.
• Alternative Housing – an apartment provided to the tenant owner during the demolition and construction period. The alternative housing must have conditions similar to the original apartment (size, number of rooms, similar floor level) and be located in an area close to the project.
• New Apartment – the apartment that the tenant will receive in the new building after construction is completed. The new apartment will have an area and specifications similar to the original apartment, in accordance with the agreement's terms.
• Demolition Compensation – monetary compensation paid to the tenant for damages resulting from demolition, construction and changes to living conditions. This compensation typically covers moving expenses, alternative housing rental (if not provided), and service fees.
• Unit Price – the price per square meter in the new apartment, on which the price of the new apartment to be provided to the tenant is calculated. The price may depend on area, floor level and location within the new building.

Stages of the Demolition and Reconstruction Process in TAMA 38/2

The demolition and reconstruction process in TAMA 38/2 includes several legal and organizational stages, each with implications for tenant rights:

1. Building Plan Proposal – the contractor or developer proposes a building plan to the planning authorities. The plan includes details on the new apartments, legal requirements for existing tenants, and requirements for alternative housing.
2. Plan Approval – the authorities review the plan and decide whether it meets TAMA 38/2 requirements. At this stage, tenants can raise objections or request modifications.
3. Signing of Agreement Between Tenants and Contractor – each tenant owner must sign an agreement with the contractor. The agreement defines the tenant's rights, the alternative housing, the new apartment, and the compensation.
4. Demolition and Construction – after the agreements are signed, the demolition process begins. Tenants are transferred to alternative housing, and the contractor begins construction.
5. Completion of Construction and Acceptance Arrangements – upon completion of construction, tenant owners receive their new apartments. At this stage, verification is performed to ensure the new apartment complies with the agreement's terms.
6. Transfer of Ownership and Registration – after receiving the new apartment, the tenant owner transfers the old apartment (or his rights in it) to the contractor and receives a deed of ownership for the new apartment.

Tenant Rights in Tama 38/2 Agreement

Tenant purchasers in a Tama 38/2 project are entitled to a series of legal rights protected by law. These rights are anchored in the outline plan itself, in agreements between tenants and the contractor, and in the rulings of Israeli courts. Understanding these rights is critical to ensure you receive all your entitlements in the process.

Right to an Alternative Apartment: Every tenant purchaser is entitled to an alternative apartment during the demolition and construction period. The alternative apartment must have conditions similar to the original apartment. Our office ensures that the alternative apartment meets legal standards and truly matches the original apartment in terms of area, number of rooms, and floor.

Right to a New Apartment in the New Building: Upon completion of construction, a tenant purchaser receives a new apartment in the new building. The new apartment must have area and building standards similar to the original apartment. If the new apartment is smaller than the original, the tenant is entitled to financial compensation for the difference.

Right to Compensation: Tenants are entitled to compensation for damages resulting from demolition and construction. Such compensation includes moving expenses, alternative apartment rental costs (if not provided free of charge), handling fees, and other damages such as damage to property or difficulties in daily life.

Right to Additional Payment for Delays: If construction is delayed beyond the date specified in the agreement, a tenant purchaser may be entitled to additional compensation for the delay. Such delays can result from construction problems, weather conditions, or other legal issues.

Right to Participate in Decisions: Tenant purchasers are entitled to participate in decisions concerning project details, such as selection of an alternative apartment, demolition timing, and so forth. Typically, tenants convene in a general assembly to vote on important decisions.

The Alternative Apartment: What You Need to Know

The alternative apartment is a critical part of the Tama 38/2 agreement. This is the apartment where you will live during the demolition and construction of the new building. Our office strongly advises you to carefully examine the alternative apartment to ensure it meets the requirements of the law and agreement.

Criteria for an Alternative Apartment: The alternative apartment must have area similar to the original apartment (typically, no less than 95% of the original area). The number of rooms should be the same or similar, and the floor should be in a comparable range (no more than 3 floors difference). The apartment must be in good condition, including hot water, electricity, and reasonable sanitation conditions.

Location of the Alternative Apartment: The alternative apartment should be in an area close to the project, typically no more than 2-3 km from the original property. This is important to ensure the tenant does not suffer delays in commuting to work or daily activities.

Payment for the Alternative Apartment: Typically, the contractor must provide an alternative apartment free of charge. However, in some cases, a tenant may be required to pay a partial amount (typically up to 30% of the value of the alternative apartment). Our office negotiates with the contractor to ensure fair terms.

Duration of Stay in the Alternative Apartment: The tenant will remain in the alternative apartment until construction is completed and the new apartment is received. This period can be 3-5 years or more, depending on the size of the project and construction pace. Our office ensures that the contractor fulfills its obligations to provide an alternative apartment for the entire duration.

Compensation under Tama 38/2 Agreement: How Much You Are Entitled To

Compensation is a significant part of the Tama 38/2 agreement. Tenant owners are entitled to compensation for various damages resulting from demolition, construction, and changes in living conditions. It is important to understand the types of compensation and the legal calculations used to determine them.

Moving Compensation: A tenant is entitled to compensation for moving expenses from the original apartment to the temporary apartment and from there to the new apartment. This compensation is calculated according to an estimate from a professional moving company. Typically, this amount ranges between 3,000 to 10,000 NIS, depending on the apartment size and distance.

Temporary Apartment Rental Fees: If the contractor did not provide a temporary apartment at no cost, a tenant is entitled to compensation for the rent they paid. This compensation is calculated as the difference between the rent they paid and the rent they should have paid for a reasonable temporary apartment.

Efforts and Expenses Fee: Tenants are entitled to a fee for their efforts in handling matters related to the project, such as participation in general meetings, apartment inspections, and communication with the contractor. This fee is typically calculated as a percentage of the original apartment's value (usually 1-3%).

Compensation for Damage to Property: If a tenant's belongings were damaged during demolition or construction, the tenant is entitled to compensation for the damage. This compensation is calculated based on an assessment of actual damage.

Compensation for Area Difference: If the new apartment is smaller than the original apartment, a tenant is entitled to compensation for the area difference. This compensation is typically calculated as the area difference multiplied by the unit price in the new apartment.

Compensation for Construction Delays: If construction is delayed beyond the date specified in the agreement, a tenant is entitled to compensation for the delay. This compensation is typically calculated as a fixed daily amount or as a percentage of the new apartment's value.

Comparison Between Tama 38 and Tama 38/2

It is important to distinguish between Tama 38 and Tama 38/2, as each has different legal requirements:

Tama 38/2 was created to strengthen tenant rights in urban renewal projects. If you are a tenant in a Tama 38/2 project, you are better protected than under regular Tama 38. Our firm ensures that you receive all the protections due to you under Tama 38/2.

Practical Tips for Residents in TAMA 38/2 Projects

1. Read the agreement carefully: Before signing the agreement, read it carefully with your family. If you do not understand certain parts, seek legal advice. Our office offers a complimentary initial consultation to help you understand your rights.

2. Document everything: Keep copies of all agreements, notices, correspondence, and updates from the contractor. This documentation can be critical if a dispute arises in the future.

3. Inspect the alternative apartment: When you receive the alternative apartment, inspect it thoroughly. Ensure that the area, number of rooms, floor, and building specifications match the original apartment. If there are any issues, report them to the contractor in writing.

4. Monitor the construction: During construction, monitor the progress. If there are significant delays, report them and request compensation in accordance with the agreement.

5. Inspect the new apartment: When construction is completed, inspect the new apartment thoroughly. Ensure that it meets the requirements of the agreement. If there are any issues, report them to the contractor in writing and request repairs or compensation.

6. Maintain communication with the contractor: Maintain regular communication with the contractor. If you have questions or issues, ask them in writing and obtain written responses.

7. Obtain legal advice: If you have questions or concerns, obtain legal advice from an attorney experienced in TAMA 38/2. Our office is available for complimentary consultation at the initial meeting.

When to Contact an Attorney Regarding TAMA 38/2

There are several situations in which it is advisable to contact an attorney experienced in TAMA 38/2:

• Before signing the agreement with the contractor — to review the agreement and ensure your rights are protected.
• When you receive the alternative apartment — to verify that it meets the requirements of the agreement.
• If the contractor fails to fulfill its obligations — such as failure to provide an alternative apartment, construction delays, or failure to pay compensation.
• When you receive the new apartment — to verify that it meets the requirements of the agreement.
• If there is a dispute with the contractor or other residents — to protect your rights in arbitration or court.
• If you wish to understand your rights in the residents' association — to participate in substantive decisions.

Mandelbaum, Gor, Witzman-Gor & Co., headed by attorney Keren Mandelbaum, offers comprehensive legal advice on TAMA 38/2 and urban renewal projects. We represent residents only, and we are dedicated to protecting your rights. The initial consultation is complimentary, and we will help you understand your rights and options.