Many real estate unites in Israel are jointly owned by several persons or companies. Israeli real estate legislation stipulates that when land is jointly owned, the ownership of each partner spread to every part of the land and no co-owner has a particular part in the land parcel. This fact may be highly important when a co-owner wishes to exercise rights.
There are certain circumstances (other than in the case of intentional co-ownership) that may create a partnership in real estate such as inheritance, marital relationship or reparcellation of adjacent land parcels. One should distinguish between partnership in real estate and registration of an apartment house as a condominium, in which case the shared ownership applies only to the common assets (staircases, lobby, etc.) but each unit is independently owned.
Generally, with a view to avoid conflicts, partners in real estate usually aim to enter into a partnership agreement that regulates the joint management of the asset, defines the rights and obligations of each of the partners and often allocates specific parts of the parcel to each partner. Unless otherwise agreed or decided by the majority of the owners, the law provides that each partner is entitled to make reasonable use of the jointly owned asset (as long as such use does not oust the other) and take, even without the consent of the others, reasonable and urgent measures required in order to maintain the property, prevent damage thereto or protect the ownership and possession.
By law, each partner may demand the dissolution of the partnership at any time, and absent agreement to that end, dissolution will be by the Court. If possible, dissolution will be in kind (each partner receives a separate and independent parcel) and the Court may also order equalization payments if necessary (e.g. when the different parcels are not of equal value). If the joint land cannot be distributed in kind or such distribution will cause a significant loss to the partners or even only to some of them, dissolution will be achieved by selling the land in its entirety and distributing the proceeds of the sale.
When joint property may be registered as a condominium, the Court may order the dissolution of the partnership by way of registration of a condominium and distribution of the units according to each partner's pro rata holdings in the joint property (and equalization payments, if required). Dissolution by registration of a condominium is a specific case of a distribution in kind, and is thus preferable on liquidation by sale.
Because dissolution of a partnership in land or entry into a partnership agreement are often complex processes with a long lasting impact, it is important to engage an attorney knowledgeable in real estate, generally, and land partnership agreements specifically, to assist in drafting an agreement which could protect the partners in case one chooses to dissolve the partnership. Moreover, when purchasing a real estate asset held jointly (for example, an apartment not yet registered as part of a condominium) it is vital that an attorney knowledgeable in land partnership agreements examine the status of the apartment and the rights under the agreement or absence thereof.