The Complete Guide to Buying a Farm: From "Son of Succession" to Splitting Plots

What is an agricultural estate? Definition, history and structure

To understand the world of allotments, it is important to go back a little in time. Agricultural allotments are a forced creation of the Zionist movement and state institutions in their early days. The goal was to settle the land, ensure food security, and create an agricultural settlement belt along the state's borders. The state, through the Israel Land Authority (ILA), allocated land to cooperative associations (moshavim), and the associations in turn allocated the land to settlers, who were defined as "possessors." This is the basis for everything we will learn later: an allotment owner is not the registered owner of the land in the land registry, but rather a tenant or possessor of it for a long period, subject to an agreement with the ILA and the cooperative association.

The structure of the estate: details of plots A, B and C

One of the most unique and important characteristics of a Nahla is its internal division into three separate plots, each with its own purpose and rules. Understanding the differences between the plots is critical for anyone considering purchasing a Nahla.

Plot A – The farmyard: This is the “core” of the estate, the yellow area in the city building plans (TABA). The estate owner’s residence, farm buildings (such as barns, chicken coops or warehouses) and the yard areas are concentrated on this plot. The area of ​​Plot A is usually defined as up to 2.5 dunams, and most of the residential building rights are concentrated in it. All significant planning activities, such as building an additional house or splitting a plot, take place in this area.

Plot B – Agricultural areas: These are the areas adjacent to Plot A or located near it, and are designated for agricultural cultivation. The landowner is obligated to cultivate these areas in accordance with their designation. In many cases, these areas are cultivated jointly by the cooperative association or leased to other farmers, but their agricultural designation is carefully maintained. It is not possible to build on Plot B for housing, and any change of designation is a rare and extremely complex process.

Plot C – The common cultivation areas: These areas belong to the cooperative association and are cultivated jointly by all members of the association. The owner of the estate has a relative and indefinite share in these areas, but he does not have a specific plot that he can point to as his own. The rights in Plot C are tied to membership in the association and cannot be transferred separately from the estate itself.

Rights in the estate: What really belongs to you?

Understanding the status of rights in a property is perhaps the most confusing point for potential buyers. Unlike purchasing an apartment in the city, this is not always a matter of full private ownership. The vast majority of properties in Israel are held under "freehold" rights.

Not Ownership, But Lease: Understanding "Permit-to-Own" Status

"Permitted" status means that the settler has received a license or permission to use the land from the cooperative association, which itself leases the land from the RMI. This is a three-way system of contracts: RMI ↔ Association ↔ Landowner. The practical meaning is that every action on the land, from sale to construction, requires the approval of the two additional parties, the RMI and the association. Over the years, this status has been strengthened by court rulings, and today it is considered a strong and almost proprietary right, but is still subject to the terms of the original lease agreement.

Scope of building rights in the estate (Plot A)

Building rights on the estate are a dynamic issue that has changed significantly over the years following decisions by the Land Registry. As of today, the main rules allow for significant utilization of Plot A for residential purposes:

• Main residence: Generally, one residence can be built on a built-up area of ​​160 square meters without paying the RMI.
• Second housing unit: A second housing unit can be added, usually for the younger generation, with an area of ​​up to 55 square meters. This construction involves the payment of capitalized rental fees to the RMI.
• Decision 1523 and its amendments: The decisions of the Ministry of Housing and Urban Development in recent years have opened up significant possibilities. Today, it is possible to increase the total built-up area for residential use in Section A (up to 2.5 dunams) to up to 375 square meters (and even more in national priority areas), and to divide it into up to 3 separate housing units. The exercise of these rights involves the payment of capitalization fees to the Ministry of Housing and Urban Development.
• Non-agricultural activity (PAL): In addition to residences, small non-agricultural businesses can be established on Plot A, such as B&Bs, kindergartens, clinics, or offices, up to an area of ​​500 square meters. Here too, this involves obtaining permits and paying the RMI.

It is important to emphasize: Any construction or change requires a building permit from the local planning and building committee, and any construction violations may greatly complicate future transactions and result in heavy fines.

A son continues: the mechanism for transferring an estate between generations

One of the most unique and charged legal institutions in the world of estates is the institution of the "successor son." This mechanism was created to ensure the continuity of the agricultural farm as a single unit and prevent its division among many heirs, which would harm its agricultural viability.

What is a "successor son" and what is his legal status?

A "continuing son" is one of the children of the owners of the estate, who is chosen by them to continue and maintain the farm after their death. The appointment gives the continuing son a special status: he receives the right to receive all the rights to the estate after his parents pass away. The appointment is in effect a commitment by the parents to provide a future gift. Many parents see the appointment of the continuing son as a way to ensure the continuation of the agricultural lineage, similar to what is seen in historic estates such as the impressive estate in Nahalal .

Appointment process: Tripartite agreement

The appointment of a successor is not made solely by will or internal family agreement. For the appointment to be valid, it requires a formal procedure that includes:

1. Parental consent: The owners of the estate must jointly decide on the identity of the successor son.
2. Consent of the successor son: The chosen son must agree to accept the appointment, which also includes duties (such as sometimes caring for parents in their old age).
3. Registration and approval: The appointment must be reported and approved by the cooperative association and/or the RMI, and registered in their books. Without this registration, the appointment may be legally invalid.

A son continues versus an inheritance: what prevails?

Here lies one of the most complex issues. According to court rulings, a valid appointment of a successor son that has been made and registered legally prevails over the provisions of a later will. That is, if parents appointed their son as successor son, and then wrote in their will that the estate be divided among all their children, it is the appointment that will determine the fate of the estate. The estate "exits" the parents' estate and is transferred directly to the successor son. This sometimes creates difficult family conflicts, so it is important to settle the issue clearly and consciously, and to ensure fair compensation for the remaining siblings to the extent possible.

Revocation of the appointment of a successor is possible, but complex, and usually requires proof of a fundamental breach of the agreements on the part of the successor or a radical change in circumstances.

Splitting an estate plot: The next generation stays close

One of the most significant developments in the world of allotments in the last decade is the possibility of splitting a plot from Part A of the allotment. This reform, led by Rami, was intended to address the need of the younger generation to build their home in a moshav, near their parents, and also to allow allotment owners to realize some of the economic value inherent in the land.

RAMI decisions allowing for split

The possibility of splitting is anchored in a series of decisions of the Israel Lands Council, which have been updated over the years (Decisions 979, 1155, and now mainly Decision 1591 and its amendments). The rationale is to allow the owner of the land to "take out" a plot of land from Section A and turn it into a separate registration unit with independent building rights. The result is the creation of an independent plot of land that can be sold or another house built on it, similar to options such as a plot for sale in Kfar Baruch . The split plot is usually registered with capitalized lease rights (de facto ownership) and is completely separate from the original land.

The "capitalization" and split process: step by step

The process is complex and requires patience and professional guidance. It includes several main steps:

1. Planning review: Examination with the local committee as to whether the urban development plan applicable to the moshav allows for such a split, and what the minimum permitted lot size is.
2. Submitting an application to the RMI: Submit a formal application to the RMI to perform "capitalization of rights" for the residential plot (plot A). Capitalization is an advance payment of the future lease fees for the residential rights.
3. Appraisals: RAMI sends an appraiser on its behalf to estimate the land value of the residential plot (2.5 dunams) without the existing development and construction.
4. Payment of capitalization fees: Based on the appraisals, RAMI issues a payment voucher. The payment is 33% of the land value (with significant discounts in national priority areas). This payment grants the landowner full rights to all residential construction potential in Plot A.
5. Preparation of a Tzr (plan for registration purposes): After payment, a survey map is prepared that defines the boundaries of the plot intended for division. This process requires approval from the Regional Planning Commission and the local committee.
6. Signing a lease agreement: After the approval of the zoning ordinance, a separate lease agreement was signed for the divided lot, and it was registered as a separate unit.

Splitting costs: not just capitalization fees

It is important to understand that the capitalization fee is only part of the costs. There are additional payments to consider:

• Improvement levy: Upon approval of the split, the local committee will require payment of an improvement levy equal to 50% of the increase in the value of the lot as a result of the split. This is a very significant payment.
• Capital Gains Tax: The sale of the divided plot to a third party will be considered a real estate transaction and will be subject to capital gains tax, subject to the exemptions stipulated by law.
• Professional costs: Fees for a lawyer, appraiser, surveyor, and architect who accompany the process must be taken into account.

Buying a Farm: A Practical Guide for the Buyer

Once we understand the complexity, it is clear that purchasing a farm requires much more preparation and in-depth research than purchasing a standard property. If you are looking for farms for sale in the Jezreel Valley , it is important to act systematically and measuredly.

Preliminary checks are essential before purchasing.

Before you proceed to sign a contract, you should complete a comprehensive checklist:

• Checking rights: The estate file must be checked in the RMI and the cooperative association. Verify who is registered as the owner of the rights, whether a successor has been appointed, and whether there are foreclosures or liens.
• Planning inspection: Obtain a building file from the local committee, check the urban plan applicable to the property, ensure that there are no construction exceptions, and examine the future construction potential.
• Debt check: Make sure there are no debts to the RMI, the association, the local committee, or the tax authorities.
• Association Bylaws: Read the cooperative association bylaws carefully. There are moshavs with strict admission requirements, admissions committees, and sometimes rules that restrict how the land can be used.
• Taxation aspects: Consult with an expert lawyer regarding expected tax liabilities: purchase tax (which is calculated differently in estates), and future improvement levy if you wish to exercise rights.

The importance of professional guidance

A land transaction is not a "do-it-yourself" transaction. The success and security of the transaction depend on the professional team you recruit. The team should include:

1. A lawyer specializing in real estate and the agricultural sector: This is the most important professional. He needs to be familiar with the decisions of the Israeli Land and Agricultural Court, the laws of cooperative societies, and the unique taxation issues.
2. Real estate appraiser: to assess the value of the property, examine the rights and planning potential.
3. Real estate broker specializing in estates: A local broker, who knows the moshav, the people, the nuances, and the history of each estate, can be a valuable asset. He can reveal information that you won't find in any official document and help you navigate the association and the community.

As someone who lives and breathes the countryside, I can attest that purchasing a piece of land is much more than a real estate transaction. It is joining a community, connecting with the land and the landscape, and fulfilling a way of life. With the right knowledge and the appropriate professional guidance, you can do so with complete confidence and fulfill your dream of your own private piece of paradise.