Upon the couple's separation, the husband's mother demanded the repayment of funds she provided for the purchase of their joint apartment, contending that the transaction was a loan and that a loan agreement had been signed with the son during the marriage.
The Court found that the funds constituted a gift. Under Israeli caselaw, funds received by a couple from their parents during the marriage are classified as either a gift or a loan with the starting point being the 'presumption of a gift,' i.e. it is assumed that parents intend to grant a gift to the couple due to the special close relationship between them. In this case, although the mother transferred funds to the couple during their marriage for the apartment purchase and had her son sign a loan agreement before a lawyer, the wife was not a party to the agreement, was unaware of its existence and believed the money was given as a gift to assist with the purchase. Therefore, the funds were a gift and the wife is not obligated to repay her relative share.