Opinion: The Prohibition on Discrimination Does Not Apply to Private Real Estate

In present-day Israel, many people do not realize that a developer or contractor selling an apartment on private land is not subject to any prohibition preventing refusal to sell on grounds of religion, race or sex. This differs from recent reports of housing-discrimination claims involving public land allocated by tender, such as Israel Land Administration tenders.

Headlines occasionally feature allegations by people identifying as a distinct minority, whether of a particular ethnic community or a religion different from most neighborhood residents, that a contractor refuses to sell to them because of “discrimination.” As explained below, where apartments are privately owned, are built on private land, or are not subject to contractual restrictions on sale, the conduct does not constitute discrimination and is permitted.

The Prohibition of Discrimination in Products, Services and Entry into Places of Entertainment and Public Places Law prohibits discrimination, among other things, in public services. Under the Law, these include transport, communications, energy, education, culture, entertainment, tourism and financial services intended for the public. The explanatory notes to the 1999 bill expressly stated that the prohibition did not extend to real estate, which might be addressed by separate legislation. In other words, the statutory prohibition does not apply to private parties’ transactions in matters not expressly included in the definition of “public service,” and in any event does not apply to real-estate transactions.

Companies selling real estate fall outside the Law, and the bill’s explanatory notes show that excluding real-estate transactions was deliberate, reflecting the legislature’s wish to preserve freedom of contract in private entities’ property transactions.

Israeli case law states that not every separation in housing or education necessarily constitutes discrimination. Moreover, in a 2010 judgment, the Supreme Court clarified that even regarding state-owned land allocated by tender, whether allocation to a group with distinctive religious or cultural characteristics constitutes discrimination remained unresolved.

Since enactment of the Law, decisions criticizing housing discrimination have focused on tender law, particularly land allocated to developers by tender or designated for allocation to settlers through a tender process. In this context, improper discrimination between bidders is prohibited, but legitimate grounds may justify distinctions between participants or groups, subject to the Israel Land Authority’s oversight of their validity and legality.

Author: Adv. Uri Shiloh, real-estate practitioner and partner at A. Shiloh & Co.