This article looks at a legal case involving a property in Tirat Carmel, where the municipality refused to issue a full Arnona (municipal property tax) debt clearance certificate. The property owner, a real estate company, requested the certificate to complete a registration of ownership, but the municipality excluded part of the property based on an unproven claim that the owner didn’t fully own it. The court ruled that since there was no unpaid Arnona debt, the municipality must issue a full, unconditional certificate. It also clarified that municipalities cannot delay property transactions based on ownership disputes or internal records that are not backed by official documentation.
By Attorney Amit Raz, with the assistance of intern Liron Maimon
According to Section 324 of the Municipalities Ordinance, the transfer of property in Israel’s Land Registry cannot be recorded unless a certificate issued by the municipality is presented, confirming that all debts owed to the municipality for that property have been paid in full—or that no debts exist. Without this certificate, the Land Registry will not register the new owner of the property.
This case reviews a District Court ruling regarding the power of local authorities to issue a certificate under Section 324. Specifically, it explores whether municipalities can include reservations based on unproven claims of partial ownership or unrelated unpaid Arnona debt (municipal property tax).
Case Background:
An investment company applied to the Tirat Carmel Municipality for a debt clearance certificate in order to register its ownership of a commercial property that includes an event hall and three storefronts.
The municipality issued the certificate, but included a reservation excluding the stores at the front of the building. The exclusion was based on a claim that the petitioner did not own that portion of the property. However, in the past, the municipality had issued clearance certificates to the petitioner without any such reservations.
The petitioner repeatedly contacted the municipality to clarify the reason for the exclusion. When it received no response, it contacted the city’s legal department and was told the exclusion was based on internal documents—but no details or evidence were provided. The petitioner sent another letter, which again went unanswered, prompting it to file a petition with the Haifa District Court and request an interim order.
Although the court ordered the municipality to respond, it failed to do so. In a hearing on the interim order, the municipality claimed the petitioner only owned the event hall, while different parties held rights to the storefronts. Still, no supporting documents were submitted.
It later emerged that the municipality’s legal counsel had previously represented one of the individuals it claimed owned one of the storefronts, leading the petitioner to raise concerns about a potential conflict of interest. The municipality denied any issue.
The petitioner also noted that the storefronts were rented out and had been taken over unlawfully by tenants. A police complaint was even filed for trespassing related to one of the storefronts.
The petitioner then submitted an official declaration from the Israel Land Authority confirming that no lease agreements had been signed for the property with anyone other than the petitioner. Despite this, the municipality failed to appear at the preliminary hearing and did not submit a response as ordered.
Ultimately, the municipality reiterated its claims and added that issuing a clearance certificate might infringe on third-party property rights. The petitioner argued the decision was arbitrary and outside the municipality’s legal authority.
Legal Question:
Can a municipality issue a municipal debt clearance certificate with exclusions if no unpaid Arnona debt exists for the property?
Court Ruling:
The court ruled in favor of the petitioner. It found that the petitioner had submitted clear and unequivocal evidence proving it owned the entire property, and that no outstanding unpaid Arnona debt existed. The municipality is not the authority responsible for determining property ownership and has no legal basis to refuse the certificate or include exclusions.
As a result, the court ordered the municipality to issue a full, unconditional certificate of unpaid Arnona debt clearance under Section 324. The municipality was also ordered to pay legal expenses and attorney’s fees totaling 30,000 NIS.
The ruling underscores that municipalities have no authority to decide property ownership or interfere in real estate registration. Their role is limited to confirming whether unpaid Arnona debts are owed. This decision reinforces property owners’ rights to receive the required certificates without unjustified delays or arbitrary exclusions.
(Administrative Petition 3761-03-24, Baraka Investments Israel Ltd. v. Tirat Carmel Municipality, November 16, 2024))
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