Buying property from a trustee does not relieve the purchaser of establishing exactly what is being sold. Court approval, documents evidencing rights and a survey plan may concern the same property yet answer different questions. Where actual possession does not match the boundaries of the transaction, or earlier commitments exist, property rights, the contract, planning and the sale procedure need to be examined together.
365 square metres that became a dispute: the Adan judgment
In Civil Appeal 729/23, M. Adan Marketing and Trade Ltd v. Jiries Brothers Construction and Properties Ltd, decided on 21 April 2024, the dispute concerned rights purchased from a trustee in a plot in Tamra’s industrial zone. Neighbours occupied approximately 365 square metres under an earlier agreement and had carried out works changing the ground level. The Supreme Court dismissed the purchaser’s appeal under Rule 148(b), finding no basis to interfere with the District Court’s findings or legal conclusion.
The argument that an insolvency purchase conferred unencumbered rights did not resolve the dispute. Paragraph 12 emphasised the contractual due-diligence declarations and the risk assumed by the commercial purchaser when it signed without investigating the physical situation and the rights involved. The decision does not establish that every earlier occupier prevails over a purchaser from a trustee; it demonstrates why the scope of the property sold and the facts must be clarified before relying on the sale procedure.
Official judgment: Civil Appeal 729/23, 21 April 2024 📖
The Supreme Court examined rights purchased from a trustee against occupation under an earlier agreement. Paragraphs 7–10 summarise the District Court’s findings; paragraphs 11–12 contain the Supreme Court’s decision and emphasis on contractual risk.
Four layers that must be reconciled
The rights layer: Identify whether the seller offers ownership, a leasehold, a contractual right or a right not yet registered; the register in which it appears; and the approvals needed for transfer. A registry extract, confirmation of rights and lease agreement are not interchangeable documents in every transaction. The chain of transfers and the parties holding earlier contractual rights must also be established.
The possession layer: A site visit and survey may reveal use by a neighbour, tenant, operator or infrastructure owner. Each occupier needs to be matched to a document and explanation: the basis and extent of possession, whether consideration is paid, and who undertook to end it. Marking a boundary on a plan does not, by itself, prove that vacant possession within that boundary can be delivered at completion.
The planning and engineering layer: Changes in ground levels, retaining walls, access routes, infrastructure or the functional division between plots can make a formally available property-law solution impractical or expensive. The legal investigation must frame the right question for the professional: not merely whether construction exists, but how it affects the ability to separate, vacate, use and register the property in accordance with the transaction.
The contractual and procedural layer: Read the invitation for offers, sale agreement, annexes and court approval together. Identify the representations made, the investigations assigned to the purchaser and what remains outside the sale. A general expression such as “free of rights” should not be assumed to answer every question about area, possession, planning or a third party’s undertaking.
Turning due-diligence findings into transaction terms
A due-diligence report is useful only if its findings can be translated into a decision and a contractual mechanism. Where a discrepancy is material, options to examine may include precisely defining the area sold, a completion condition, an undertaking to deliver a missing document, a price adjustment or a dispute-management mechanism. Not every mechanism is available in a trustee sale or competitive process; establish in advance what can be proposed and what requires approval.
A planning example: if access to a building crosses land occupied by a neighbour, reducing the price is not necessarily a solution. Examine whether the intended use is possible, the legal basis for access, the infrastructure passing through the area and what happens if the practical arrangement ends. Sometimes the issue is not merely the property’s value but its ability to support the activity for which it was acquired.
Allocating costs between the parties also requires precision: who bears surveying, regularisation, physical works, relevant taxes and levies, and what happens if completion is delayed. These are transaction-specific questions for examination, not grounds to assume that every liability falls on the same party or that every change in structure is tax-neutral.
When the discrepancy emerges after purchase
Separate the investigation of rights from the choice of defendant and remedy. Proceedings to evict an occupier, a dispute with the seller and a claim against another party are not necessarily the same proceeding. Collect the complete transaction documents, plans, handover records and correspondence, and map when each fact became known and to whom. The Adan judgment left open other courses of action without expressing a view; that is not advance confirmation that another cause of action exists.
Before a demand or proceeding, consider the practical outcome sought: recovering the area, regularising use, correcting registration or compensation. A solution that can be formulated in a pleading may in practice require engineering changes, another party’s consent or a planning procedure. This is why the matter may require coordinated treatment of contract, property, company and tax law, depending on the circumstances.
Further reading: commercial contract interpretation and risk allocation. Alon Kraus Law Office handles property disputes and complex civil and commercial matters in Israel. You may send an initial non-confidential description of the transaction or dispute.