When Dealing with an Anachronistic Land Policy

Adv. Ronen Manor

One of the fundamental principles of land policy, established in Resolution No. 1 of the Israel Lands Council, is that upon the death of a leaseholder of an agricultural plot (nahala), the lease rights to the land shall not be divided among the heirs. Instead, the rights shall be transferred to a single heir who is willing and capable of maintaining the farm. This principle is reflected in lease agreements and is further enshrined in Section 114 of the Inheritance Law. The rationale behind this non-division principle is to ensure equity in the size of agricultural plots, guarantee a minimum area necessary for sustainable agricultural livelihood, and preserve Jewish settlement in rural areas, which integrates residential life with agricultural activity. However, in recent years, as rural settlements undergo transformation, this principle has been increasingly eroded.

In a recent ruling by Judge Zfat of the Tel Aviv Family Court, the court granted joint rights in an agricultural property to multiple heirs, despite the principle of non-division. The case involved a man and his two wives, who jointly held permissive possession rights (Ber Reshut) in a farm located in Moshav Tnuvot. In his will, the husband bequeathed his share of the farm to one of his wives. Following his passing, a dispute arose between the two widows over their respective rights to the farm. During the legal proceedings, a consensual judgment was issued, ordering the partition of the property, with one-third of the proceeds to be held in trust until the final determination of its distribution. Approximately six months later, one of the widows passed away. Consequently, the surviving widow petitioned the court to revoke the partition order and sought a declaration that the farm was not part of the deceased husband's estate.

Court's Decision

Judge Zfat ruled that under Clause 19(g) of the Settlement Agreement, which governs inheritance rights to agricultural properties, the farm does not constitute part of the estate of the deceased leaseholder. Instead, if one of the spouses passes away, the rights in the farm transfer to the surviving spouse. Although each spouse is entitled to designate a single heir in their will, this right is subject to the condition that it does not infringe upon the rights of the surviving spouse. In this case, since the deceased had two wives, the result was that the farm had to be divided between them.

The court also rejected the surviving widow's claim for exclusive ownership of the farm, both on procedural and substantive grounds. Procedurally, a consensual judgment had already been issued ordering the partition of the property. Substantively, under the Settlement Agreement, the rights of the deceased widow would automatically pass to one of her heirs who is willing and capable of maintaining the farm. As a result, one of the late widow’s children would now become a co-owner of the farm alongside the surviving widow.

Addressing the conflict with the non-division principle, Judge Zfat remarked:

"The rationale behind the transfer of rights as outlined in the Settlement Agreement is rooted in the Israel Land Authority’s land policy, which dates back to the early days of Jewish settlement in pre-state Israel. According to this policy, dividing the ownership of an agricultural plot could lead to the dissolution of the farm's agricultural viability. However, in light of modern economic and social changes, it is evident that in most cases, this land policy is no longer relevant, particularly in central Israel, where many of these farms are no longer engaged in agriculture. In practice, even the Israel Land Authority has gradually shifted its approach by allowing certain forms of subdivision."

The Decline of the Non-Division Principle

Furthermore, the court dismissed the Israel Land Authority's demand to condition the transfer of rights on the widows' agreement that upon the death of one of them, the entire property would pass to the surviving widow. In this regard, Judge Zfat ruled:

"A land policy that prohibits division, with all due respect, cannot override the provisions of the Settlement Agreement and does not have the power to alter its terms. This is especially true when dealing with an anachronistic land policy that no longer aligns with today’s economic and social reality. Furthermore, it is evident to all that the dispute between the parties is not about the original purpose of the policy—namely, preventing the disintegration of a farm as an independent agricultural unit—but rather about the question of which of the widows' children will ultimately benefit from the farm’s real estate value."

Final Ruling

The court upheld the partition order, determining that the proceeds from the farm’s sale would be divided between the surviving widow and the heirs of the deceased widow.

Judge Zfat’s ruling aligns with a growing trend in Israeli case law, whereby courts increasingly recognize the true economic value of leaseholder rights and adapt their legal approach to better reflect the modern reality of land use.

(Tel Aviv Family Court Case Nos. 26220 & 26222/00, Lidani Shoshana v. Lidani Nadera, Plaintiff’s Counsel: Adv. A. Ashri, Defendant’s Counsel: Adv. D. Franco, Judgment issued on April 21, 2004.)