Quick Answer: Under Israel's Land Law 1969, each co-owner holds an undivided share of the whole property. Any co-owner may demand dissolution of the co-ownership (piruk shutafut) at any time (Section 37), even if the others object. If the owners cannot agree, the court divides the property physically where that is practical. Otherwise it orders a sale and divides the proceeds by share, and in practice that means a sale for almost every apartment. The claim is filed in the Magistrate Court where the property is located, or in the Family Court when the co-owners are family members.

Co-ownership usually comes about in one of three ways. Siblings inherit a parent's apartment. A foreign investor buys together with a partner. Or former spouses both remain on the title. The law gives every co-owner a strong right to end the arrangement, so the practical questions are how the property gets divided or sold, who pays what in the meantime, and how much tax is due at the end.

1. How co-ownership works in Israel

Co-ownership (shituf be-mekarke'in) is governed by Chapter 4 of the Land Law 1969 (Sections 27–43). Under Section 27, each co-owner's ownership extends, in proportion to their share, to every part of the property. No co-owner owns a specific room or floor. Section 28 presumes the shares are equal unless the registration or the circumstances show otherwise.

Shares are recorded at the Land Registry (Tabu) or, for property not yet registered there, with the Israel Land Authority (ILA) or the registering company. Before an estate is distributed, heirs are not yet registered owners. Once the inheritance or probate order is registered, they hold the property as co-owners in the shares the order sets.

This guide is about co-ownership of a single property: an apartment, a house or a plot. The relationship between different apartment owners in one building (bayit meshutaf, a condominium) is governed by separate rules in the same law.

2. Rights and obligations of co-owners

The co-ownership agreement comes first

Co-owners can sign an agreement on how the property is used, managed, rented and sold. Under Section 29, it can be registered at the Land Registry, and once registered it also binds anyone who later becomes a co-owner. The statutory rules below apply only where there is no agreement on the point.

Management and use

  • Ordinary management and use: owners of a majority of the shares decide (Section 30(a)). A co-owner who feels wronged can ask the court for directions (Section 30(b)).
  • Anything beyond ordinary management needs the consent of all co-owners (Section 30(c)). Major renovations and changes of use are typical examples.
  • Individual rights: any co-owner may, without the others' consent, use the property reasonably as long as this does not prevent the others from similar use. A co-owner may also take urgent unforeseen steps to maintain it, and reasonable steps to protect it. The others must be informed as soon as reasonably possible (Section 31).

Costs and use fees

  • Expenses: each co-owner bears necessary maintenance and management costs in proportion to their share. One who paid more can recover the excess from the others (Section 32).
  • Exclusive use: a co-owner who uses the property exclusively, for example by living in it, must pay the others use fees (dmei shimush) in proportion to their shares (Section 33). This matters a great deal when one sibling lives in an inherited apartment while the others live abroad.
  • Rental income: if the property is rented out, the net rent belongs to the co-owners by share. A co-owner who collects all of it can be sued for the others' portion.

Selling or mortgaging your own share

Under Section 34, each co-owner may sell, mortgage or otherwise deal with their own share without the others' consent. A clause in a co-ownership agreement that restricts this right is valid for no more than five years (Section 34(b)). There is no statutory right of first refusal. If you want one, it must be in the agreement and is subject to that five-year limit.

3. Dissolving co-ownership (piruk shutafut)

Section 37(a) is short: every co-owner is entitled to demand dissolution at any time. The other owners' objection does not block it. In exceptional cases, courts have refused or delayed dissolution under the general duty of good faith, for example where the demand is plainly abusive. That is rare.

Can co-owners agree to stay together?

Yes, but only to a limited extent. A co-ownership agreement can restrict the right to demand dissolution. If it does so for more than three years, Section 37(b) allows the court, once three years have passed, to order dissolution anyway if it considers this just in the circumstances.

Dissolution by agreement

Co-owners can agree how to end the co-ownership: one buys the others out, they sell together, or they split a divisible plot. A physical division of land by agreement also needs planning approval (Section 38). Only where there is no agreement does the court decide the method.

From Adv. Eli Shimony's practice: I always recommend trying to reach an agreement first, whether the co-owners negotiate it themselves or through mediation. It is faster and cheaper than a lawsuit, and far less stressful for everyone involved.

4. The court process: partition or forced sale

Which court?

Under Section 51(a)(3) of the Courts Law, claims to divide land are heard by the Magistrate Court (Beit Mishpat HaShalom), whatever the property's value. Where the co-owners are family members (spouses, siblings who inherited together and similar), the case is usually heard by the Family Court, which can also deal with related family claims in the same proceeding.

Physical partition first

Where the property can be divided, the court orders partition in kind, with balancing payments if the parts are not of equal value (Section 39). In buildings, Section 42 allows partition by registering the building as a condominium and allocating separate units. That can work for a house with two genuine apartments.

Sale and division of proceeds

Where the property cannot be divided, or division would cause significant loss, the court orders a sale and divides the proceeds (Section 40). This is the normal result for a single apartment. The usual sequence is:

  1. A claim is filed and served on the other co-owners, who can respond and raise counterclaims (use fees, expenses, improvements).
  2. The court rules that the co-ownership is dissolved by sale and usually appoints a receiver (kones nechasim), often a lawyer, to sell the property.
  3. The receiver obtains an appraisal, markets the property and invites offers. The co-owners themselves may bid.
  4. The court approves the sale. The proceeds are divided by share after the receiver's fees, sale costs, taxes and any amounts the court sets off between the co-owners.

From Adv. Eli Shimony's practice: As a rough guide, a court dissolution typically takes somewhere between eight months and a year and a half from filing the claim to the sale. There are exceptions in both directions.

Family home exception. If the property is the spouses' family home, Section 40A says a court-ordered sale will not be carried out until the court is satisfied that suitable alternative housing exists for the minor children and the parent who has custody of them.

ILA leasehold. Much Israeli property is held on long-term lease from the ILA rather than as freehold. Co-lessees can usually seek dissolution of their lease rights as well, and the ILA's position is relevant to the sale.

In Practice: A filed dissolution claim often changes the negotiation. A co-owner who has ignored letters for years now faces a receiver selling the property on the open market, typically below what a private sale would achieve, with fees coming off the top. That prospect often brings a buyout offer. Prepare the claim properly before filing: an appraisal, an accounting of who paid what, and any use-fee claim.

5. Buying out a co-owner's share

A private buyout is usually faster and cheaper than a court sale. One co-owner buys the other's share, typically at a price based on an independent appraisal of the whole property, sometimes with a discount for a minority share or for an occupied property.

  • Sign a written sale agreement for the share (Land Law Section 8 requires writing) and register a warning note in the buyer's favor.
  • Report the deal to the Real Estate Taxation office within the statutory deadline. The seller may owe betterment tax and the buyer pays purchase tax on the share acquired (see section 7). Transfers between certain relatives can qualify for exemptions or reduced rates.
  • Register the transfer at the Land Registry or the ILA once the tax certificates are issued.
Illustrative scenario (hypothetical): Three siblings inherit a Jerusalem apartment in equal shares. Two live in the U.S. and want to sell. One lives in the apartment and refuses. The two abroad sign powers of attorney and their Israeli lawyer files a dissolution claim in the Family Court. The claim includes use fees under Section 33 for the years the third sibling lived there alone. The occupying sibling counterclaims for the cost of repairs. Faced with a receiver's sale, the parties negotiate. The occupying sibling buys out the other two shares at an appraised value, less a credit for part of the repairs and plus a reduced sum for use fees. The court approves the settlement and the court case is closed.

6. Special issues for foreign and diaspora co-owners

Acting from abroad

You do not have to travel to Israel to bring or defend a dissolution claim. Sign a power of attorney in favor of an Israeli lawyer, either before an Israeli consul or before a local notary with an apostille. A second, specific power of attorney is usually needed later to sign the sale or transfer documents. See our guide to powers of attorney in Israel.

From Adv. Eli Shimony's practice: When one of the heirs or co-owners lives abroad, what usually holds up the dissolution is the lack of proper legal representation in Israel. Without a representative here, it is hard for a foreign resident to move a dissolution forward. The taxes that apply to a foreign resident on the sale also affect how willing they are to go ahead with it.

When the co-owner on the spot controls the property

Common complaints from co-owners abroad: the resident co-owner rents the property out and keeps the rent, lives there without paying, makes changes without consent, or simply refuses to sell. The tools available are:

  • A claim for your share of the rent, or for use fees under Section 33.
  • An application for court directions on management (Section 30(b)).
  • A dissolution claim, in which the court can also appoint a receiver to manage and rent the property until it is sold.

Keep records of market rent (an appraiser's opinion carries weight) and of every payment you made toward taxes, maintenance or mortgage.

Inherited property

For diaspora families, the usual route into co-ownership is inheritance. The inheritance or probate order must be issued and registered before the heirs can sell or bring a standard dissolution claim as registered owners. Disputes about the estate itself go to the inheritance proceedings. See selling inherited property in Israel and inheritance disputes between heirs.

Receiving your share of the proceeds

Proceeds can be transferred abroad, but the receiver or the lawyers will release your share only after the tax certificates are issued. Make sure your Israeli bank account or the lawyer's trust account is ready, and provide identification and a source-of-funds explanation early. Banks' compliance checks are a common cause of delay.

7. Tax when co-owned property is sold

A court-ordered sale is taxed like any other sale. Each co-owner reports the sale of their own share:

  • Betterment tax (mas shevach) applies to each seller's gain. Non-residents are not exempt. The rate and any exemption depend on the seller's own position and on when the property was bought.
  • Inherited apartments. Section 49B(5) of the Real Estate Taxation Law exempts the sale of an inherited residential apartment if several conditions are met. The seller must be the deceased's spouse or descendant (or a descendant's spouse). Before death, the deceased must have owned only one residential apartment. And the deceased would have been exempt had they sold it. Using this exemption does not use up the seller's own single-apartment exemption.
  • Purchase tax is paid by the buyer, including a co-owner who buys the others out, on the share acquired.
In Practice: Get a betterment tax calculation before filing a dissolution claim or agreeing on a buyout price. Whether the Section 49B(5) exemption applies can change each sibling's net proceeds dramatically. Selling the inherited apartment first, and other property later, can also preserve other exemptions. The answer depends on facts that are easy to check early and hard to fix after the sale is reported. See our guide to betterment tax.