Converting jointly owned property to a registered shared building (bayit meshutaf) is one method of physically dividing ownership in dissolution proceedings. This approach allows each partner to own a specific unit independently, eliminating the partnership.
What is a Shared Building Registration?
Under Israeli law, a multi-unit building can be registered as a bayit meshutaf (shared building) in the Land Registry. In this registration, each apartment or unit becomes a separate legal entity that can be bought, sold and mortgaged independently.
The common areas (lobby, parking, garden) are owned jointly by all unit owners, but each unit is privately owned.
When is This Option Available?
Registration as a shared building is possible when the property physically contains multiple separate units that can each function independently. A building must have defined separate units with separate entrances, utilities and functionality.
A single apartment cannot be converted to shared building registration. A building with two or more separate apartments can be.
The Process of Shared Building Registration
Converting to shared building registration involves several steps: a licensed surveyor prepares a units plan, the plan is approved by the relevant authorities, and the registration is completed in the Land Registry.
Once registered, each partner becomes the sole owner of their allocated unit.
Advantages of This Approach
Physical division by shared building registration allows each partner to own their property completely independently, without any ongoing relationship with their former partner. Each can sell, mortgage or use their unit as they see fit, without requiring the other’s agreement.
This clean break is often preferable to continuing financial relationships through shared sale proceeds.
Tax Implications
Converting to shared building registration may have tax implications. An attorney will advise on the tax treatment of the conversion and ensure the process is structured to minimize unnecessary tax costs.
