The Rental and Borrowing Law

Chapter A: Rent

Title A: General Provisions

1. The nature of Rent

Rent is a right conferred for consideration (hereinafter – Rent) to hold and use a property.

Civil Law

Rental is a right conferred for consideration (hereinafter – Rent) to temporarily hold and use a property.

2. Applicability

• The provisions of this chapter shall apply to the rental of real estate and chattels, and mutatis mutandis – also to the rental of any property subject to purchase.
• The provisions of this chapter shall also apply, mutatis mutandis, to sublet.
• The provisions of this chapter shall apply when no other law contains special provisions regarding the subject in hand and in the absence of any other intention implied from the agreement between the parties.

Civil Law

(A) The provisions of this chapter shall apply to the rental of real estate and chattels, and mutatis mutandis – also to the rental of rights.

• The provisions of this chapter shall also apply, mutatis mutandis, to sublet.
• The provisions of this chapter shall apply when no other law contains special provisions regarding the subject in hand and in the absence of any other intention implied from the agreement between the parties.

3. Details not provided for in the agreement

Details of a rent agreement not provided for in the agreement between the parties shall be according to the custom agreed upon by the parties to the agreement in their previous transactions and in the absence of such transactions – according to the custom that reasonable parties consider applicable in transactions of the same kind.

Civil Law

Details of a rent agreement not provided for in the agreement between the parties shall be according to the custom agreed upon by the parties to the agreement in their previous transactions and in the absence of such transactions – according to the custom that reasonable parties consider applicable in transactions of the same kind.

4. Good faith

An obligation deriving from a rent agreement must be complied with in the acceptable manner and in good faith; the same applies to the use of a right deriving from the agreement.

Civil Law

An obligation deriving from a rent agreement must be complied with in the acceptable manner and in good faith; the same applies to the use of a right deriving from the agreement.

Title B: Renter's Obligations

5. Delivery, its date and place

• The Renter shall deliver the leasehold to the Tenant by delivering the leasehold to his possession.
• If a delivery was scheduled for a certain date or within a certain period, the party the scheduling was in the favor of which may demand to advance such time, provided that by doing so no damage is caused to the other party. If a delivery date was not scheduled, delivery shall be in proximity to executing the rent agreement.
• Delivery shall be at the place where the leasehold is located at the time of executing the agreement.

Civil Law

(A) The Renter shall deliver the leasehold to the Tenant by delivering the leasehold to his possession.

(B) If a delivery was scheduled within a certain period, the Renter may set the date of delivery within said period of time; If a delivery date was not scheduled, delivery shall be made within a reasonable time after executing the agreement; in such cases the Renter shall notify the Tenant a reasonable amount of time in advance of the delivery date.

(C) Delivery shall be at the place where the leasehold is located at the time of executing the agreement.

6. Unsuitability

• The Renter shall have failed to comply with his obligations by delivering to the Tenant a property that at the time of delivery:
• Was unsuitable in terms of type, description, quality or characteristics or otherwise to what was agreed upon between the parties (hereinafter: Unsuitability).
• Was unsuitable to what is required for the ordinary use of the leasehold or for a special purpose implied by the agreement or for another purpose the Tenant is accustomed to rent for and the Renter knew that.
• Is not free of any benefit, lien, foreclosure and any other third party rights which may impair the Tenant's use.
• The Tenant may not rely on the unsuitability if he used the leasehold after he had found out about the unsuitability.

Civil Law

The Renter shall have failed to comply with his obligations by delivering to the Tenant a property that at the time of delivery was unsuitable in terms of type, description, quality or characteristics or otherwise to what was agreed upon between the parties (hereinafter: Unsuitability); however, the Tenant may not rely on unsuitability in any of the following:

• He knew about it at the time of executing the agreement.

(2) He did not inform the Renter a reasonable time after having discovered it or, if he did inform as aforesaid, he did not provide the Renter an ample opportunity to inspect the leasehold; this paragraph shall not apply if the Renter knew of the unsuitability.

6A. Price gouging

The rent agreement shall be subject to price gouging laws.

7. Duty of repairing the leasehold

• The Renter shall, within a reasonable time after receiving the Tenant's demand, repair in the leasehold or in the property in his possession that serves the leasehold and was mentioned in the agreement between them, anything which may be repaired, that negates or limits the agreed or ordinary use of the leasehold (hereinafter: Defect), whether the Defect existed at the time of delivering the leasehold to the Tenant or whether it was formed thereafter, except for a Defect to which the Tenant is liable pursuant to the Bailee's Law, or the repair of which, pursuant to the agreement or the customary under the circumstances, is not applicable to the Renter or does not require expertise.
• The Renter may fulfill his obligation pursuant to this section by way of replacing the property with another, which would at least be identical to the previous one, in the case of non-specific leasehold; or by better leasehold than the previous one in case of specific leasehold; the expenses of replacement shall be borne by the Renter.

Civil Law

(A) The Renter shall, within a reasonable time after receiving the Tenant's demand, repair in the leasehold or in the property in his possession that serves the leasehold anything that negates or imposes an actual limitation on the use of the leasehold pursuant to the agreement or according to the customary under the circumstances (hereinafter: Defect), whether the Defect existed at the time of delivering the leasehold to the Tenant or whether it was formed thereafter, except for a Defect to which the Tenant is liable pursuant to the Bailee's Law, 5727-196, or the repair of which is not applicable to the Renter, pursuant to the agreement or the customary under the circumstances.

(B) If the leased property is a chattel and the identity thereof has not meaning for the Tenant, the Renter may fulfill his obligation pursuant to this section by replacing the property with another; the expenses of replacement shall be borne by the Renter.

8. Concealing Unsuitability or Defect

Notwithstanding the content of any agreement, the Tenant shall be entitled to the rights pursuant to Sections 6 and 7 unless the Tenant knew of the Unsuitability or Defect or relinquish their value.

Civil Law

If the Unsuitability or Defect of the leasehold derives from facts the Renter knew or should have known at the time of executing the agreement and failed to disclose to the Tenant, then notwithstanding the content of any agreement the Tenant shall be entitled to the rights pursuant to Sections 6 and 7.

9. Remedies due to non-repair

• If the Renter fails to repair the Defect within a reasonable time after receiving the Tenant's demand in this respect, the Tenant may –
• Repair the Defect and demand reimbursement from the Renter.
• Reduce the rent as long as the Defect is not repaired, according to the ratio by which the value of rent was reduced as a result of the Defect in comparison to its value pursuant to the agreement.
• If the Tenant wishes to repair the Defect, he shall notify the Renter accordingly a reasonable time in advance.
• In respect of a Defect the repair of which is urgent to the extent that it is impractical to request the Tenant to wait for it to be repaired by the Renter, the Tenant may repair it as stated in sub-section (A)(1) without a demand pursuant to Section 7(A) or a notice pursuant to sub-section (B).

Civil Law

If the Renter fails to repair the Defect within a reasonable time after receiving the Tenant's demand in this respect, the Tenant may –

(1) Repair the Defect and demand reimbursement from the Renter for his reasonable expenses.

(2) Reduce the rent as long as the Defect is not repaired, according to the ratio by which the value of rent was reduced as a result of the Defect in comparison to its value pursuant to the agreement.

(B) If the Tenant wishes to repair the Defect, he shall notify the Renter accordingly a reasonable time in advance.

(C) In respect of a Defect the repair of which is urgent to the extent that it is impractical to request the Tenant to wait for it to be repaired by the Renter, the Tenant may repair it as stated in sub-section (A)(1) without a demand pursuant to Section 7(A) or a notice pursuant to sub-section (B).

10. Defect the repair of which must not be requested

If the Defect originates in circumstances that at the time of executing the agreement the Renter did not know and should not have known of, or did not foresee and should not have foreseen, and repairing the Defect under such circumstances is impossible or would have imposed on the Renter a materially different obligation than that which was agreed upon by the parties:

• In a specific property – the Defect shall not be a ground for requesting repair, replacement of leasehold or reimbursement as stated in Section 9(A)(1).
• In a non-specific property – the Defect shall be a ground for requesting repair, replacement of leasehold or reimbursement as stated in Section 9(A)(1) or reduced rent as stated in Section 9(A)(2), unless:
• The Defect was not in the property itself and it was formed as a result of the Tenant's use of the leasehold;
• The purpose of rent can no longer be completed even by means of an alternative property.
• If the Renter was not obligated to provide an alternative property as stated in sub-section (A) or did not provide an alternative property as stated in sub-section (B) and the property may be sold and its consideration may be used to buy or rent another property for the purpose of completing the rent – in case the property is chattel – the Tenant may do so, and in case the property is real estate – the Tenant may not do so.

Civil Law

If the Defect originates in circumstances that at the time of executing the agreement the Renter did not know and should not have known of, or did not foresee and should not have foreseen them, and he could have not prevented them, and repairing the Defect under such circumstances is impossible or would have imposed on the Renter a materially different obligation than that which was agreed upon by the parties, the Defect shall not be a ground for requesting repair, compensation or reimbursement as stated in Section 9(A)(1).

11. Undisturbed use

The Renter shall enable the Tenant to use the leasehold for the term of rent according to the agreement between the parties without disturbances caused by him or on his behalf.

The civil Law è The Renter shall enable the Tenant to use the leasehold for the term of rent according to the agreement between the parties without disturbances caused by him or on his behalf.

Title C: Tenant's obligations

12. Receipt of leasehold duty

Repealed

Civil Law

The Tenant is obligated to receive the leasehold for holding it on such date and at such place as stated in Section 5.

13. Rent

• The Tenant shall pay the rent to the Renter.
• If the rate of rent or the way to determine it was not agreed on – the rent agreement shall not be valid, unless the rate of rent is set and known to all at the time of executing the agreement.
• If the rate of rent was not agreed on and the value of renting the leasehold was set and known to all at the time of executing the agreement, and the Tenant used the leasehold – proper rent shall be paid for that time, according to the low rate in the market for identical leasehold.

Civil Law

(A) The Tenant shall pay the rent to the Renter.

(B) If the rate of rent or the way to determine it was not agreed on, proper rent shall be paid which should have been paid under the circumstances at the time of executing the agreement.

14. Time and place of payment

• If rent was set at a certain amount for specific periods of time, it shall be paid at the end of each period.
• The rent shall be paid in one of the acceptable ways or in money equal, wherever the Renter is.

Civil Law

(A) If rent was set at a certain amount for specific periods of time, it shall be paid at the beginning of each period in respect of real estate rental, and at end of each period in respect of any other rental.

(B) The rent shall be paid in one of the acceptable ways at the Renter's place of business, and in the absence of such business – in his domicile.

15. Exemption from payment

• If the Tenant is unable to use the leased property for the rental purpose due to destruction of or damage in the leasehold, the agreement is cancelled and the Tenant is exempt from paying the rent for the time during which such use was prevented.
• If the Tenant is unable to use the leased property for the rental purpose not due to the destruction of or damage in the leasehold, the Tenant may cancel the rental as a result and he is exempt from paying the rent for the time during which such use was prevented. If the Tenant failed to cancel the agreement, he shall pay the rent also for the time during which such use was prevented.
• The permission stated in sub-section (B) to cancel the agreement shall apply only if there was no link between the use made by the Tenant in the leasehold and the reason preventing the use.

Civil Law

(A) If the leased property is real estate and the Tenant is unable to use it for the rental purpose due to circumstances relating to the leasehold or ways of access thereto and the Tenant failed to cancel the agreement due to that, he is exempt from paying the rent for the time during which such use was prevented; the Renter may, after a reasonable time under the circumstances, cancel the agreement unless the Tenant notified him beforehand that he waives the exemption from paying the rent.

(B) Said exemption shall only apply if at the time of executing the agreement the Tenant did not know of the circumstances stated in sub-section (A) and should not have known about them, or did not foresee or should not have foreseen them, and could not have prevented them.

16. Use of the leasehold

The Tenant shall only use the leasehold according to the agreement; however, if such use was not stipulated as sole use, he may use the leasehold for another use, provided that this shall not damage the leasehold or burden the Renter more than the agreed.

Civil Law

The Tenant shall only use the leasehold according to the agreement; however, if such use was not stipulated as sole use, he may use the leasehold for another use, provided that this shall not damage the leasehold or burden the Renter more than the agreed.

17. Renter's inspection and repair of the leasehold

The Tenant shall allow the Renter, at any reasonable time, to inspect and repair the leasehold it, provided that the Renter notifies him accordingly a reasonable time in advance and shall refrain as much as possible from disturbing the Tenant.

Civil Law

The Tenant shall allow the Renter, at any reasonable time, to inspect and repair the leasehold, provided that the Renter notifies him accordingly a reasonable time in advance and shall refrain as much as possible from disturbing the Tenant.

Title D: Term of rental

18. Commencement of rental

If the commencement of the rental term was not agreed on, it shall start upon the act of rent.

Civil Law

The rental term shall commence upon delivery of the leasehold to the tenant.

19. Termination of rental

• If the rental term was not agreed on, each party may terminate the rental by a notice to the other party.
• If the rental term was not agreed on, and the parties continue to comply therewith after the end of the agreed period without setting a new period –
• The Renter may immediately terminate the rental.
• The Tenant may terminate the rental by a notice to the Renter.
• If a notice was delivered as stated in sub-section (A) or sub-section (B)(2), the rental shall terminate –
• When rent was set at a specific amount for specific periods – upon the earlier of: at the end of the period starting shortly after delivering the notice, or following three months from the date of delivering the notice.
• In any other case – on the date set to that end in the notice, and if such date is unreasonable – within a reasonable period of time following delivery of the notice.

Civil Law

(A) If the rental term was not agreed on, or the parties continued to comply therewith after the end of the agreed period without setting a new period, each party may terminate the rental by a notice to the other party.

(B) If a notice as stated in sub-section (A) is delivered, the rental shall terminate –

(1) When rent was set at a specific amount for specific periods – upon the earlier of: at the end of the period starting shortly after delivering the notice, or following three months from the date of delivering the notice.

(2) In any other case – on the date set to that end in the notice, and if such date is unreasonable – within a reasonable period of time following delivery of the notice.

20. Returning the leasehold

• At the end of the rental the Tenant shall return the leasehold to the Renter, and the Renter shall accept it.
• In a real estate rental, the leasehold shall be returned empty.
• In rental of a chattel, the Tenant may return it to the Renter anywhere but the Renter may claim the leasehold only where it was delivered to the Tenant.

Civil Law

(A) At the end of the rental the Tenant shall return the leasehold to the Renter, and the Renter shall accept it.

(B) In rental of real estate, the leasehold shall be returned empty.

(C) In rental of a chattel, the leasehold shall be returned at the place it was delivered to the Tenant.

Title E: Miscellaneous provisions

21. Assignment of leasehold

The Renter may assign his rights in the leasehold to another; in case he does so, the right buyer shall replace the Renter in anything relating to the rental agreement.

Civil Law

The Renter may assign his rights in the leasehold to another; in case he does so, the right buyer shall replace the Renter in anything relating to the rental agreement, but as long as the Renter has not provided the Tenant with a notice regarding the assignment or the Tenant has not otherwise found out about it – the Tenant is exempt from paying the rent and complying with the rest of his obligations to the Renter.

22. Assignment of rental

• In rental of a chattel – the Tenant may only lend or rent the leasehold to another with the Renter's consent.
• In rental of real estate – the Tenant may lend or rent the leasehold to another even without the Renter's consent.
• If the Renter originally stipulates that he shall not allow subletting – this stipulation is valid.

Civil Law

The Tenant may only assign the right to hold and use the leasehold or sublet it to another with the Renter's consent; however, if the Renter does not consent to the transaction due to unreasonable reasons or stipulates his consent with unreasonable conditions, then –   

(1) In rental of real estate – the Tenant may conduct the transaction without the Renter's consent.

(2) In any rental – the court may allow the transaction under such conditions it shall deem right; and in rental of real estate the court may do so notwithstanding the content of the rent agreement.

23. General remedies due to breach of contract

The remedies conferred to the parties pursuant to this chapter shall add to rather than derogate from the provisions of the Contract (Remedies for Breach of Contract) Law.

Civil Law

The remedies conferred to the parties pursuant to this chapter shall add to rather than derogate from the provisions of the Contract (Remedies for Breach of Contract) Law, 5731-1970.

24. Applicability of the Bailee's Law

For the purpose of the Bailee's Law, a Tenant shall be considered as a remunerated bailee.

Civil Law

For the purpose of the Bailee's Law, 5727-1967, a Tenant shall be considered as a remunerated bailee when the purpose of keeping the property is subordinate to the main purpose of holding it.

25. Offsetting

Debts the parties owe each other as a result of the rental may be offset.

Civil Law

Debts the parties owe each other as a result of the rental may be offset.

Chapter B: Borrowing

26. The nature of borrowing

Borrowing is the right to hold and use a property when the right was conferred without consideration.

Civil Law

Borrowing is the right to hold and use a property for a limited period of time when the right was conferred without consideration.

27. Section applicability

The provisions of Sections 2 to 5, 11, 17-18, 20, 21, 22 and 25 shall also apply, mutatis mutandis, to borrowing.

Civil Law

The provisions of Sections 2 to 5, 11, 12, 17, 18, 20, 21 and 25 shall also apply, mutatis mutandis, to borrowing.

27A. Applicability of the Bailee's Law

The provisions of the Bailee's Law shall apply to the borrower.

28. Unsuitability (/negation of remedies)

• The unsuitability of the lent object shall be subject to the provisions of Section 6(A)(1) and 6(B) but it shall not be used as a ground for compensation, unless the lender knew of it at the time of executing the agreement and the unsuitability caused direct damage to the borrower.
• Breaching a borrowing agreement shall not constitute a ground for claiming enforcement.

Civil Law

(A) The unsuitability of the lent object shall be subject to the provisions of Section 6 but it shall not be used as a ground for compensation, unless the lender knew of it at the time of executing the agreement and the borrower did not know of it.

(B) Breaching a borrowing agreement shall not constitute a ground for claiming enforcement.

29. Termination of borrowing

• The lender may cancel the borrowing agreement as long as he did not transfer the lent object to the borrower but he may not terminate the borrowing prior to its end if the lender died or if the borrower needs the lent object for his own use.
• If a borrowing term was not agreed on, or the parties continued to comply therewith after the period agreed on without setting a new period, the borrower may terminate it at any time.
• Even if a borrowing term was agreed on, the lender may return the lent object within the period and terminate the borrowing.

Civil Law

(A) The lender may cancel the borrowing agreement as long as he did not transfer the lent object to the borrower and he may terminate the borrowing prior to its end if the lender died or if the borrower needs the lent object for his own use, everything by delivering a notice to the lender a reasonable time in advance.

(B) If a borrowing term was not agreed on, or the parties continued to comply therewith following the end of the agreed period without setting a new period, each party may terminate the borrowing by delivering a notice to the other party a reasonable time in advance.

30. Assignment of borrowing

Repealed

Civil Law

The lender may only assign the right to hold and use the lent object to another or sub-borrow it with the borrower's consent.

Chapter C: Miscellaneous

31. Use without holding

Repealed

Civil Law

The provisions of Chapter A shall also apply, mutatis mutandis, to a right conferred for consideration to use a property which does not include the right to hold the property, and the provisions of Chapter B shall apply, mutates mutandis, to such right which was conferred without consideration.

32 – 33

Repealed

Civil Law

32. The second book of the Mejelle is hereby repealed insofar that it refers to the rental of properties.

Civil Law

33. In the Real Estate Law, 5729-1969 4 –

• In Section 3, "in consideration of rent" shall be replaced with "in consideration";
• Section 82 –
• In Section 83, the words "except for Section 82" shall be deleted.

34. Commencement and provisions of transition

This law is effective immediately.