You Recovered Unclaimed Land in Israel, but You Share It with Strangers. Now What?

If you are in the process of recovering unclaimed land in Israel — or considering whether to pursue a claim — there is one reality you should understand from the outset: in the vast majority of cases, you will not be the sole owner.

When unclaimed land is recovered through Israel’s Unit for the Location and Restitution of Unclaimed Property, the original owner’s estate typically has multiple living heirs. After the probate process is completed and ownership is finally registered at the Tabu (Israel Land Registry), the title extract often reveals four, seven, sometimes twelve or more co-owners — some of them your distant relatives, others descendants of entirely separate families whose names you may not recognize. One co-owner might hold 40% of the rights. Another holds 25%. You might hold 8%. A few others hold fragments of 3% or 5% each. And in many cases, none of you has ever set foot on the property.

This is something we discuss with our clients early in the process because it directly affects the case strategy. In our experience handling unclaimed property matters for over 20 years, co-ownership is one of the most common outcomes—and it raises an important question every heir needs to plan for. You’ve recovered something valuable, but you may not be able to sell the entire parcel without the cooperation of every other co-owner. You can’t build on it independently. You can’t fence off your share, because under Israeli law, no co-owner has a physically defined portion of the land. Each person holds an undivided share in the entire property.

So what do you do?

This article explains how co-ownership of unclaimed Israeli land happens, what your legal rights are, and the practical options available to you — whether you want to sell your share, sell the entire parcel, or force a resolution when co-owners refuse to cooperate.

Note: If you are still in the early stages of this process and have recently received a government letter, start with our guide on what to do if you got a letter about unclaimed property in Israel.

How Does This Happen? Why You End Up Owning Land with Strangers

To understand the situation, you need to grasp how unclaimed property becomes fragmented among so many owners in the first place.

Most unclaimed land in Israel was originally purchased decades ago — in the 1920s, 1930s, or 1940s — by individuals who often lived abroad. When the original owner died, the property was never formally inherited. No probate was filed in Israel. The land sat unregistered and unmanaged for generations.

Over those decades, the original owner’s descendants multiplied. A single owner who died in 1945 might have had three children. Those children might have had two or three children each. By the time the land is recovered in 2025, the original owner’s estate has potentially 15 to 20 living heirs spread across the United States, Canada, Europe, South America, and Israel.

Each of those heirs is entitled to a share proportional to their position in the family tree under Israeli succession law. But they don’t each get a separate piece of land. Instead, they all become co-owners of the same undivided parcel — each holding a percentage of the whole.

To complicate matters further, the State of Israel — through the Administrator General’s office — sometimes parcellizes land while it is still under government management. This means the government may have subdivided the original parcel and allocated portions to different ownership chains, sometimes without the heirs’ knowledge or consent. When the land is finally released, heirs may discover they share a parcel not only with their own relatives, but with descendants of entirely different families who held rights to adjacent portions of the original plot.

The result is a group of co-owners who have no relationship with each other, often live in different countries, and have very different ideas about what to do with the property.

Your Legal Rights as a Co-Owner of Israeli Land

Israeli law is clear on one fundamental point: no one can be forced to remain a co-owner of real estate against their will.

Section 37(a) of the Israeli Land Law (1969) is key because it grants any co-owner the right to demand the dissolution of co-ownership at any time, regardless of their share size, which is vital for planning your next steps.

This is a powerful right, and understanding it changes the calculus for every heir sitting on a fractional share of Israeli land they cannot use.

Knowing the practical paths forward-such as negotiation, buyouts, or legal proceedings, helps you understand your options based on your specific situation and the cooperation level of other co-owners.

For a broader explanation of how property partnerships are dissolved in Israel — including marriage and condominium scenarios — see our guide on how to dissolve a property in Israel.

Option 1: Negotiate a Voluntary Sale Among All Co-Owners

The best outcome — and the one we always pursue first — is to get all co-owners to agree to sell the entire parcel together and split the proceeds according to each person’s share.

When a property is sold as a whole, it commands its full market value. Buyers are far more willing to purchase 100% of a clean parcel than a fragmented 8% share encumbered by co-ownership complications. The proceeds are then distributed to each co-owner in proportion to their registered share.

This sounds straightforward, but in practice it requires locating every co-owner (who may be scattered across multiple countries), verifying their identity and legal standing, and getting them all to agree on a sale price, a real estate agent, and a timeline. Some co-owners may be unresponsive. Others may have unrealistic price expectations. Some may not even know they are co-owners.

An experienced Israeli attorney can guide you through this process, providing reassurance and confidence as you navigate negotiations and legal steps.

Once all co-owners agree, the sale proceeds according to the standard process for selling inherited property in Israel.

Option 2: One Co-Owner Buys Out the Others

In some cases, one heir — often the one with the largest share or the strongest connection to Israel — wants to keep the land. They may be willing to buy out the other co-owners at a fair market price.

This requires an independent appraisal of the property, a negotiated per-share price, and a standard real estate transaction for each buyout. The buying co-owner ends up with full ownership; the selling co-owners receive cash.

This works well when there is a willing buyer among the co-owners and when the valuations are clear. It becomes difficult when co-owners disagree on the property’s value or when one party tries to hold out for an inflated price.

Option 3: Sell Your Individual Share to a Third Party

You have the legal right to sell your individual share of a co-owned property to anyone — another co-owner or an outside buyer. You do not need the other co-owners’ permission to do this.

However, this option comes with a significant practical drawback: a fractional share of co-owned land almost always sells at a discount to its proportional value. An 8% share of a parcel worth 2 million NIS is mathematically worth 160,000 NIS — but a buyer purchasing that 8% share inherits all the same co-ownership complications you’re trying to escape. They cannot develop the land; they cannot sell the entire parcel without the other co-owners; and they may face the same years of coordination challenges. As a result, the market price for a fractional share is often significantly less than the proportional value.

We generally advise clients to explore Options 1 and 2 before independently selling a fractional share, unless speed is the priority and the discount is acceptable.

Option 4: File a Partition Action in Israeli Court

When negotiation fails — when co-owners refuse to sell, cannot be located, or simply will not cooperate — Israeli law provides a formal legal mechanism to force a resolution.

Under Section 37(a) of the Israeli Land Law, any co-owner can file a partition action (known in Hebrew as piruq shutafut) with the Israeli court. The court will then order one of two outcomes:

• Partition in kind — physically dividing the land into separate parcels, one for each co-owner. In theory, this gives each person an independent parcel they can sell, develop, or hold as they wish. In practice, partition in kind rarely works for unclaimed property cases. The parcels are often too small to subdivide meaningfully, the co-owners hold unequal percentages that don’t translate neatly into physical divisions, and zoning regulations may prohibit subdivision below a certain size.
• Partition by sale — selling the entire property and distributing the proceeds proportionally. Under Section 40 of the Israeli Real Estate Law, the court can order that the property be sold — typically through a court-appointed receiver who manages the bidding process — and that the proceeds be divided among all co-owners according to their registered shares. This is the most common outcome in partition actions involving unclaimed land.

The court may also allow an “internal tender” — giving existing co-owners the right of first refusal to match the highest outside bid before the property is sold to a third party. This protects co-owners who want to keep the property, while still ensuring the price reflects fair market value.

Filing a partition action is a serious legal step. It involves court filings, potentially appointing a receiver, obtaining property appraisals, and managing a court-supervised sale process. The process can take several months to over a year, depending on the complexity of the case and whether any co-owners contest the action. But the right to file is absolute — no co-owner can prevent another from exercising it.

The Tax Implications You Need to Understand

Any sale of Israeli real estate — whether voluntary or court-ordered — may trigger Israeli capital gains tax. For non-residents of Israel who also own residential property in their home country, recent amendments to Israeli tax law have eliminated certain exemptions that previously applied. The amount of tax depends on multiple factors, including when the property was originally acquired, whether the seller owns other residential property, and the seller’s country of residence.

Our firm has extensive experience reducing or eliminating Israeli capital gains tax for non-resident clients. In many cases, we have successfully reduced the tax to zero for clients who do not own other residential property, or to 7-10% for those who do. Each case requires careful analysis, and we strongly recommend consulting with our team before any sale.

For U.S. residents, there are additional reporting obligations. The proceeds from a sale of Israeli real estate must be reported on your U.S. tax return, and you may need to file IRS Form 8938 (Statement of Specified Foreign Financial Assets) and FinCEN Form 114 (FBAR), depending on the amounts involved. We coordinate with our clients’ U.S. tax advisors to ensure compliance on both sides.

What We’ve Seen in Practice: Why These Cases Need an Attorney Who Knows Both Sides

We have handled hundreds of unclaimed property cases over more than 20 years. Many of those cases involved the exact co-ownership situation described in this article — heirs in the United States or Canada who recovered land only to discover they shared it with people they had never met.

Here is what we’ve learned from that experience:

1. The earlier you address the co-ownership issue, the better the outcome. Heirs who wait for years, hoping the situation will resolve itself, lose negotiating leverage and allow the property to deteriorate in value. Municipal taxes (Arnona) may accumulate. Betterment levies may be imposed. Other co-owners may sell their shares to outside investors who are even harder to work with.
2. Communication is everything. In most cases, the other co-owners want the same thing you do — to sell the property and receive their share. The problem is not disagreement; it’s disorganization. No one is coordinating the process. An attorney who can contact every co-owner, present a clear plan, and manage the sale from start to finish often converts a years-long stalemate into a completed transaction in months.
3. Don’t assume your fractional share is worthless. We’ve seen clients dismiss their 5% or 8% share as insignificant, only to discover that the entire parcel — when sold as a whole — is worth millions of shekels. Your small percentage of a large number is still a significant sum. The key is to maximize value by selling the entire property, not just your fragment.
4. The court is a tool, not a last resort. Filing a partition action is sometimes the fastest way to bring unresponsive co-owners to the table. The mere filing of the action — which any co-owner can initiate — often motivates the others to negotiate seriously for the first time.

A Note from Our Israeli Attorney

Many of the unclaimed property cases I have handled over the past two decades ended with this exact challenge — the land was recovered, the probate was complete, but the client was stuck in a co-ownership arrangement with people they didn’t know. Some of these co-owners lived in Israel. Others were in the United States, South America, or Europe. In a few cases, some co-owners could not be located.

From that experience, I can tell you that these situations are always resolvable. The question is not whether you can exit the co-ownership — Israeli law guarantees that you can. The question is whether you do it in a way that maximizes the value of your share and minimizes the time, cost, and frustration involved.

That is where having an attorney who understands both the legal framework and the practical reality of Israeli real estate makes all the difference. We don’t just file papers. We pick up the phone, call the other co-owners, negotiate fair terms, and get the deal done. And when negotiation doesn’t work, we go to court.

— Rahav D. Aharoni, Adv. Founder, Aharoni Law Firm, Israel Bar Association (Lic. No. 47409, since 2007)

Contact Our Firm For A Free Consultation

If you have recovered unclaimed land in Israel and find yourself sharing ownership with other heirs — whether relatives or strangers — we can help you understand your options and develop a strategy to move forward.

We represent co-owners of Israeli land from the United States, Canada, the United Kingdom, Europe, and Australia. Our firm handles the entire process: locating co-owners, negotiating voluntary sales, coordinating with real estate agents and appraisers, managing Israeli tax obligations, and filing partition actions when necessary.

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