You finished the probate process. The property is registered in your name at the Israel Land Authority. You should be ready to list it for sale and move on. And then you get a phone call — or more likely, a letter forwarded by a neighbor — telling you that the municipality has declared your building a “dangerous structure” (mivne mesukan, מבנה מסוכן).
If you’re living in the United States, Canada, or the United Kingdom, this news can feel like a dead end. You may wonder whether anyone will buy an apartment in a building the city considers dangerous, whether you’ll be liable for repairs you can’t afford, or whether you’re simply stuck holding an unsellable asset thousands of miles away.
You might feel overwhelmed, but this situation is more common than you think and can be resolved successfully. At Aharoni Law Firm, we regularly help international clients navigate the sale of inherited property in Israel — including properties with municipal building orders, co-owner disputes, and structural condition issues. This article walks through exactly how it works.
What Is a “Dangerous Building” Order and Why Does It Happen?
Israeli municipalities have the authority under planning and building law to inspect residential buildings and issue orders designating them as dangerous structures. These orders can require repairs, impose fines on non-compliant owners, or — in extreme cases — restrict occupancy until the hazard is addressed.
The most common reasons a building receives this designation include structural deterioration in older construction (particularly buildings erected in the 1950s through 1970s using materials and methods that have not aged well), detaching exterior facade tiles that pose a falling hazard to pedestrians, balcony deterioration and cracking, exposed rebar and concrete spalling, foundation settlement, and chronic water infiltration damage to load-bearing elements.
This is especially prevalent in cities with large stocks of older residential buildings: Tel Aviv, Jaffa, South Tel Aviv, Bat Yam, Holon, and parts of Haifa. If your inherited apartment is in one of these areas, the chances of encountering a building condition issue are significant.
What makes this situation paradoxical is that many of these older neighborhoods have become — or are becoming — some of the most sought-after locations in Israel, precisely because they are being targeted for urban renewal programs. The building may be deteriorating, but the land beneath it may be increasingly valuable. We’ll come back to this dynamic below.
The Co-Owner Problem: Why Repairs Stall for Years
To understand why these buildings end up in such poor condition, you need to understand how Israeli apartment buildings are typically managed.
Unlike the United States, where a condominium association usually maintains reserve funds and has legal mechanisms to compel assessments, Israeli residential buildings are managed by an informal building committee — the va’ad bayit. The va’ad bayit is typically composed of volunteer residents who collect modest monthly fees to cover basic maintenance: stairwell lighting, cleaning, perhaps a garden. Major structural repairs — facade restoration, roof replacement, foundation work — require special financial contributions from every unit owner in the building.
Getting every owner to agree to pay is where things break down. Some owners are elderly and living on fixed incomes. Some have moved abroad and are effectively unreachable. Some refuse to pay their share, believing other owners should cover more. And in inherited properties, some units may be held by heirs who have not yet completed probate — meaning there is no legal owner with standing to vote or contribute.
This deadlock can persist for years. The municipality issues warnings, perhaps imposes fines, but the building continues to deteriorate. For an heir living abroad who has no relationship with the other owners, doesn’t speak Hebrew, and cannot attend building meetings in person, this dynamic is deeply frustrating.
If you find yourself in this position, engaging
Can You Actually Sell an Apartment in a Dangerous Building?
Yes. No law in Israel prohibits the sale of a residential apartment simply because the building has been declared a dangerous structure. The property is yours, and you have the right to sell it.
However, the sale comes with specific legal obligations and practical realities that must be handled carefully.
Disclosure Is Non-Negotiable
Under Israeli law, sellers must disclose all material defects and municipal orders, emphasizing the legal obligation to inform buyers about the dangerous building designation and pending enforcement actions, which is crucial for compliance and transparency.
Failure to disclose is not a minor technicality. An Israeli court can void the sale entirely or hold the seller liable for significant damages if a buyer can demonstrate that the seller concealed a known defect or municipal order. Your sale contract must include clear, detailed disclosure clauses — drafted by an experienced Israeli real estate attorney — that document what was known and what was communicated.
Proper disclosure actually protects you as the seller. When everything is on the table from the start, there is no basis for a future claim.
Pricing Requires a Realistic Assessment
An apartment in a building subject to a dangerous-structure order will not sell at full market value compared to a well-maintained building. The price will reflect a discount based on the cost of repairs, the building’s condition, and coordination challenges with other owners. Understanding this can help you set realistic expectations and plan accordingly.
An independent appraisal from a licensed Israeli appraiser — one who specifically accounts for the building’s status — is essential. This protects you in two ways: it ensures you don’t price the property so low that you leave money on the table, and it gives the buyer (and their lender, if applicable) an objective basis for the transaction.
The Buyer Is Typically an Investor or Developer
When you’re selling an apartment in a building with structural issues, the buyer profile shifts. Most end-user buyers — families looking for a home — will not take on this kind of risk. The likely buyer is an investor or developer who sees long-term value in the location, who has experience dealing with building-condition issues, and who may be looking at the property through the lens of an urban renewal project.
Finding this buyer requires working with a licensed Israeli real estate agent who specializes in — or at least has experience with — difficult or distressed property transactions. This is not a listing you post on a standard platform and wait for offers. It requires targeted outreach to the right buyer pool.
Capital Gains Tax Still Applies
The sale of real property in Israel triggers capital gains tax (mas shevach), and non-resident sellers are subject to specific rules that have changed significantly in recent years. Certain exemptions that were previously available to non-resident apartment owners have been reduced or eliminated under recent legislative amendments.
However, with careful planning, the tax exposure can often be minimized substantially. At Aharoni Law Firm, we have experience structuring sales of inherited property to reduce the capital gains tax to zero or to a rate of 7–10%, depending on the specific circumstances — including the date of the original acquisition by the deceased, the heir’s residency status, and whether exemptions under the Israel-US or Israel-Canada tax treaties may apply.
This is not something to figure out after the sale closes. The tax strategy should be built into the transaction planning from the beginning.
The Urban Renewal Factor: Why Your “Problem” Apartment May Be Worth More Than You Think
Here is where the story takes an unexpected turn for many of our clients.
Many of the buildings that receive dangerous-structure orders are located in neighborhoods designated — or being considered — for urban renewal under Israel’s national TAMA 38 program or municipal Pinui-Binui (evacuation and reconstruction) initiatives. Certain zoning plans, such as the H-500 plan in Holon, and major redevelopment projects, such as Sde Dov in Tel Aviv, are reshaping entire neighborhoods.
Under TAMA 38, an existing building can be reinforced and expanded — typically with additional floors added on top — with existing owners receiving upgraded apartments and sometimes financial compensation. Under Pinui-Binui, the existing building is demolished and replaced with a new, larger development, with each existing owner receiving a new apartment in the replacement building.
If your inherited apartment is in a building that qualifies for one of these programs, the value calculation changes dramatically. The apartment’s current condition matters far less than the development rights attached to it. A unit in a crumbling building on a prime lot in South Tel Aviv or Bat Yam may be worth far more than its physical condition suggests, because a developer will eventually acquire the rights to rebuild.
There is an important caveat: urban renewal projects take years to materialize. They require agreement from a supermajority of unit owners, municipal approvals, and a willing developer. Some projects stall indefinitely. Others move forward and deliver significant value to owners.
As an heir living abroad, you face a strategic decision: sell now at a price that reflects the building’s current condition (at a discount, but with certainty and immediate liquidity), or hold the property and wait for a potential urban renewal project that could significantly increase its value (but with no guaranteed timeline or outcome).
An attorney with deep knowledge of the Israeli real estate market can assess whether urban renewal is a realistic prospect for your specific building — based on the neighborhood, the zoning, the building’s characteristics, and the current status of developer interest — and help you make an informed decision rather than guessing.
After the Sale: Getting Your Money Abroad
One aspect that foreign-based heirs often overlook until the last moment is how the sale proceeds will actually reach them. Transferring funds from Israel to a bank account in the United States, Canada, or the United Kingdom requires Israeli tax clearance, compliance with Israeli anti-money-laundering regulations, and coordination with both the Israeli and the receiving banks abroad.
This step should be planned as part of the overall transaction — not scrambled together after closing.
For a detailed discussion of international wire transfers of Israeli inheritance proceeds, see our article on receiving Israeli inheritance funds abroad.
What We’ve Seen in Practice
Over more than two decades of handling Israeli property transactions for international clients, our firm has navigated a wide range of difficult sales. A few observations from that experience:
- Buildings where repairs stalled for five, seven, or even ten years are not uncommon. The dysfunction of the va’ad bayit system in older buildings is a known reality, not an anomaly. When we take on a case like this, the first step is always to assess the actual status of the municipal order — what exactly has been ordered, what enforcement has occurred, and what the municipality’s current posture is. Sometimes the situation is less dire than the heir fears; sometimes it is more urgent.
- The right buyer makes all the difference. We have seen transactions that appeared impossible at first — a building in terrible condition, a below-market price, a discouraged heir ready to walk away — close successfully once we identified a buyer who understood the property’s long-term potential. In many cases, that buyer was an Israeli developer or investment group with experience in urban renewal areas who was specifically looking for buildings like this one.
- Disclosure done properly removes problems, not creates them. Some sellers worry that full disclosure will scare buyers away. In our experience, the opposite is true for the investor-buyer profile. These buyers expect condition issues — what they cannot tolerate is hidden surprises. A transparent sale with proper documentation actually accelerates the deal.
- Granting a durable power of attorney to your Israeli attorney early in the process saves significant time and frustration. Many steps — communicating with the municipality, engaging the va’ad bayit, signing documents at the land registry — require an in-person representative in Israel. Heirs who set this up at the outset find that the process moves far more smoothly.
- Capital gains tax planning cannot be an afterthought. We have seen heirs in other representations lose tens of thousands of dollars in avoidable tax because the sale was structured without considering the available exemptions and treaty benefits. This is one of the highest-value aspects of proper legal representation.
A Note from Our Founder & Israeli Attorney with Over 20 Years of Experience
I was born and raised in Rehovot, Israel. Before becoming a lawyer, I joined my father’s real estate brokerage firm and spent years learning the Israeli property market from the inside — walking through buildings of every era, understanding how construction quality varies by decade and by city, and learning which neighborhoods were poised for growth.
That background shapes how I approach every inherited property case today. When a client in Los Angeles, Toronto, or London tells me they’ve inherited an apartment in a building that has been declared dangerous, I don’t treat it as an abstract legal problem. I understand what a 1960s-era building in Bat Yam looks like. I know what causes facade tiles to detach in Israeli coastal construction. I know which neighborhoods are on the verge of urban renewal and which are further behind.
Our firm combines legal training with real estate experience to guide heirs through the full process—from understanding the municipal order to resolving co-owner disputes, finding the right buyer, structuring the sale to minimize tax, and transferring the proceeds abroad. It is a multi-step process, but one we know well.
If you have inherited a property in Israel and are dealing with a building-condition issue, I would welcome the opportunity to discuss your situation.
— Rahav D. Aharoni, Adv. Founder, Aharoni Law Firm, Israel Bar Association Lic. No. 47409 (since 2007) Over 20 years of experience in Israeli inheritance, probate, succession, and real estate law.
Contact Our Firm For A Complimentary Consultation
If you have inherited an apartment in Israel and the building has been declared a dangerous structure — or if you are dealing with any building-condition issue that is complicating a sale — Aharoni Law Firm can help. We represent heirs in the United States, Canada, the United Kingdom, and worldwide in the sale of inherited Israeli property, including properties with municipal orders, co-owner disputes, and structural challenges.
Phone: 888-923-0022 (US/Canada toll-free) | 972-3-905-5478 (Israel)
Offices: Beverly Hills | New York | Miami | Tel Aviv Office
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