Legal Updates

A lessor of land whose lease agreement lapsed is not entitled for compensation for taking by eminent domain even if continued to pay the lease

January 11, 2021

A company engaged in the planting and processing of orchards, and in the packaging and marketing of fruit, cultivated agricultural land for many years, even after the lease contract with the Israel Land Authority lapsed, and paid lease fees. When part of the land was taken by eminent domain for the construction of roads, it demanded compensation for the taking.
The Supreme Court held that in the absence of a valid lease contract, the status of the holder of the land is that of a licensee, a legal status that does not grant a right to compensation. A license in land is full revocable, is not deemed an oral lease and does not grant a right to compensation. In this case, a zoning change was made in 2006, about three years prior the end of the lease period set forth in the lease agreement. The Israel Land Authority did not have the authority to re-lease the land, but the company held the land even after the end of the lease period and continued to cultivate the land and paid the lease fee. The lease agreement did not include the right to extension and with the end of the lease period the lease expired while the possession in the land after the lease period lapsed was only by virtue of a tacit consent in the status of a license. Therefore, the holder of the land was a licensee and cannot expect monetary compensation for losses caused by eviction from the land.