Diur Mugan Deposits: How They Are Protected and Refunded

Under Israel’s Sheltered Housing Law, 2012, a diur mugan operator may not hold more than 7% of your deposit or ILS 70,000, whichever is lower, unless the deposit is secured: by a first mortgage on the residence registered for a trustee the residents appoint, by a bank or insurance-company guarantee given to you, or by placing 40% of the deposit with a trustee in your favour. You cannot choose to go without that security, and the operator pays for it. When the contract ends, the part of the deposit your contract makes refundable comes back with the rise in the Consumer Price Index, no later than the day you hand back the apartment or the day the contract ends, whichever is later. If the resident has died, the heirs are paid within 30 days of handing the operator an inheritance or probate order. This is the law as amended in 2018 and 2026, with the amounts in force from 1 January 2026, checked on 29 October 2026.

A pikadon (פיקדון, deposit) is the large upfront payment most diur mugan (דיור מוגן, sheltered housing) residences ask for. The law treats a resident as someone aged 60 or over living in the residence, together with the spouse who lives with them. How much of the deposit you get back over time is a matter for your contract, so every figure below is about protection and procedure, not about the erosion rate. If you are new to the model, start with what diur mugan is and how it works, and if a large deposit is the problem, see options without a large deposit.

What the operator may charge you

Section 26 of the law sets the payment rules for every licensed residence:

• The operator may not charge you anything that is not set out in your contract. Optional services that are not in the contract can be charged only if you agreed in advance and in writing to the service and to paying for it.
• Maintenance fees, and any other payment you have no practical way to decline, may not rise faster than the Consumer Price Index unless the residence’s ongoing running costs changed, and never above the maximum rate written in your contract.
• No exit fee: the operator may not charge you a payment just because you leave.
• Every payment demand must come with a written itemised list of what you are being charged for.

Before you sign, the operator must give you a disclosure document (מסמך גילוי, mismach giluy) on the ministry’s form. For the deposit it must state the amount, any mechanism for offsetting the deposit against your charges, how all or part of it is refunded after the contract ends, what may be deducted, when it is paid back, how it is linked to the index, and the exact security the operator undertakes to give you. If any of these lines is vague, ask for it in writing before you pay.

When the deposit must be secured

The operator may hold an unsecured amount only up to the lower of 7% of the deposit paid for a resident or ILS 70,000. Above that, the money must be covered by one of the securities below. In practice, once a deposit passes 1,000,000 shekels, the fixed cap is the lower figure.

The three ways a deposit can be secured

How the mortgage works

The mortgage (משכנתה, mashkanta) is registered in favour of a trustee appointed at a residents’ assembly by a majority of the residents who vote, after reasonable advance notice. The trustee’s fee must be reasonable and is agreed between the residents and the operator. If they cannot agree on the fee, the mortgage is registered in favour of each resident separately. Where the residence is registered as a condominium (בית משותף, bayit meshutaf), the operator may instead register the mortgage for each resident on the apartment named in that resident’s contract. If the residence stands on land owned by a local authority, the mortgage goes on the operator’s rights in the land; the authority may set conditions for the registration but may not block it just because it owns the land.

The guarantee and trustee options

Instead of a mortgage, the operator may give you a guarantee or transfer 40% of your deposit to a trustee. The operator chooses the trustee, but the trust contract names you as the beneficiary and the trustee holds the money for you. Note what this means: under this option the protected sum is that share of the deposit, not the full amount, so weigh it against a guarantee or a registered mortgage. Under the 2018 wording the guarantee had to come from a bank or an insurer. The Economic Plan Law for 2026, passed on 30 March 2026 and published on 31 March 2026, adds other licensed guarantors, such as licensed credit providers; its chapter on guarantees takes effect six months after the law came into force. Ask which body gives your guarantee and check its licence. One more difference: where the operator uses the guarantee or the trustee option instead of a mortgage, the law says the supervisor’s financial-stability rule and the health-expenses fund described below do not apply.

Before the building is occupied

A residence that is still being built cannot register a working mortgage yet, so the law sets a bridge:

The rules that apply whichever security you receive

• No opting out. A resident may not choose to receive no security. A contract clause or a form saying otherwise does not change that.
• The operator pays. The cost of securing the deposit falls on the operator and may not be passed on to you.
• Whoever paid is protected. If someone else paid the deposit for the resident, for example an adult child abroad, the protections apply to that person and the mortgage or other security is registered in their favour. Make sure the paperwork names the person whose money it is.
• When it can be called. A security is enforced in insolvency, including a stay of proceedings, a receivership or a liquidation order, or where it has become absolutely impossible to return the deposit.
• Older contracts are covered too. The 2018 security rules were published on 25 July 2018, took effect six months later, and apply to contracts signed before then as well.

When an operator is exempt

An exceptions committee (ועדת חריגים) of three officials, namely the Welfare Ministry’s supervisor of sheltered housing (הממונה על בתי דיור מוגן), a ministry employee with accounting and finance expertise, and a Justice Ministry employee appointed by the Attorney General, can, at the operator’s request, exempt it fully or partly from these securities, set conditions for the exemption, or order it to provide a different security or meet another requirement. It may do so only if it is satisfied that there is a real difficulty in registering a mortgage that is outside the operator’s control, that the operator took every step available to it, and that the alternative security is sufficient. It hears the residents’ representatives and the operator first, sends its written decision to the operator and the residents’ committee, and the decision is published. An exemption lasts up to two years and can be extended for further periods of no more than five years. If a residence tells you it does not register a mortgage, ask to see the committee’s decision and its expiry date.

If the operator gets into financial trouble

Where deposits are secured by a mortgage or a warning note, the supervisor may require the operator at any time to prove it has adequate financial stability. If the supervisor believes there is a reasonable concern that the operator is not a going concern, that its ability to repay deposits may be harmed, or that its debt to residents is larger than the securities it gave, the supervisor may tell the residents.

An operator that holds deposit money secured by a mortgage or a warning note must also pay into two joint funds run by the Administrator General (האפוטרופוס הכללי):

• The health-expenses fund. The operator pays ILS 235 for each resident who paid a deposit, at the times the regulations set. If the residence is insolvent or cannot return deposits and the multidisciplinary team has approved moving a resident out for health reasons, that resident receives ILS 10,584 a month from the date of leaving, as the court directs, until the total equals the deposit or the deposit is repaid, whichever comes first. What the fund paid is deducted from the later deposit refund and goes back to the fund.
• The insolvency fund. The operator pays ILS 188 for each apartment whose residents paid a deposit. In insolvency, the fund manager transfers money, under a court order, to keep the residence’s essential day-to-day operation going.

These fund amounts are updated by the Consumer Price Index every 1 January; the figures shown are those published for 2026.

Getting the deposit back

After the contract ends, the operator returns the deposit, in full or in part as your contract sets out, to you or to the trustee named in the mortgage documents, no later than the day the apartment is handed back or the day the contract ends, whichever is later. At the same time you (or the trustee) return the guarantee or any other security you hold. The amount returned carries the rise in the Consumer Price Index between the index published before the day you paid and the index published before the day it is refunded.

The operator may keep back, in trust, a sum to cover contract charges you still owe on the day of the refund. The law sets that ceiling at ILS 10,000 and updates it by the index every 1 January, so the ceiling that applies today is the indexed figure, not the base; ask the operator for the current amount and for an account of what it holds back.

You can leave at any time: the law lets a resident cancel the contract with three months’ notice, and the refund rules above then apply. In the first three months, the trial period, either side can cancel with two weeks’ written notice; the two sides may extend the trial, but not beyond one year in total.

Example (illustrative): a resident paid a 1,200,000 shekel deposit, and on leaving the contract makes 75% of it refundable, 900,000 shekels. If the index published before the payment was 100.0 and the index published before the refund is 107.0, the 7% rise brings the refund to 963,000 shekels, less any unpaid charges held back within the ceiling. Contracts differ on whether deductions are worked out before or after linkage, so ask the operator to show you the calculation on your own numbers.

Once the deposit is returned or transferred under the contract, or nothing remains of it, the security comes off. A trustee must remove the resident from its records within 14 business days of seeing the documents. Where the mortgage or warning note is in the resident’s own name, the resident (or someone they appoint who has no link to the operator) must apply to delete it within 14 business days of receiving those documents; if they do not, a lawyer appointed by the operator may apply.

When the resident dies

The operator refunds the deposit, as the contract sets out, to the heirs no later than 30 days after being given an inheritance order (צו ירושה, tzav yerusha) or probate order (צו קיום צוואה, tzav kiyum tzava’a), or, if an estate administrator was appointed, the appointment order. The heirs return the security at the same time. If no such order is produced within six months of the death, the operator must tell the resident’s appointed representative, if there is one, that a deposit exists. Where the resident named nobody to receive the balance, or that person cannot be found with reasonable effort, the operator may appoint a lawyer as trustee for the heirs to delete the mortgage and hold the money until it passes to them. Families abroad should start the order early; our estate planning guide for Israel explains the inheritance and probate routes.

When the operator sells the residence

An operator may not transfer only part of its rights or obligations under residents’ contracts. It may transfer a whole contract only if the buyer is eligible for an operating licence, the buyer undertakes to perform all of the seller’s obligations under the contracts, and every resident received the buyer’s details before the transfer. Where there is a residents’ committee, it must also consent in writing within 30 days of receiving all the information. If the committee refuses or sets conditions unreasonably, does not answer in time, or there is no committee, the supervisor may allow the transfer and must decide within 90 days of receiving a complete request.

Checklist before you transfer the deposit

For costs, contracts and how a deposit fits a wider retirement plan, see our guide to housing and senior living in Israel and the diur mugan cost breakdown.

Sources

1. Sheltered Housing Law, 2012 (חוק הדיור המוגן, התשע”ב-2012), Sefer HaChukim 2361, 3 June 2012: sections 1, 17, 18, 26, 28 and 30.
2. Sheltered Housing (Amendment) Law, 2018, Sefer HaChukim 2739, 25 July 2018: sections 27 to 27I and the second and third schedules.
3. Economic Plan Law (Legislative Amendments for the 2026 Budget Year), Sefer HaChukim 3510, 31 March 2026: section 32 (guarantors) and section 37 (start of chapter 6).
4. Yalkut HaPirsumim 14290, notice updating amounts under the Sheltered Housing Law, 25 February 2026, page 4248: amounts in force from 1 January 2026.

Many families fund a diur mugan deposit by selling a parent’s apartment, and the sale date has to fit the residence’s payment schedule. Tell us the address and when the deposit is due, and we will give you a realistic price and timeline so the money is ready before you sign.