The most expensive sentence in an Israeli diur mugan contract is often the one that looks boring. It decides whether a deposit is protected, how fast it erodes, and how long your family waits for a refund. In a world of chatbot summaries, that sentence gets skipped. Israel’s law is strong, but only if it shows up on paper.
Quick Take
- Israel requires deposit protections once the operator holds more than 7% of the deposit or 70,000 shekels.
- Refund timing and inflation linkage are real legal obligations, not polite promises. (Government of Israel)
- Maintenance fees are not a blank check, and operators must break down what they charge. (Government of Israel)
- If the site is still being built, the law contemplates temporary guarantees until the main protection is registered.
- The safest move is simple: make every money clause measurable, dated, and attached to proof.
This is general information, not legal advice.
Why does a diur mugan contract feel simple until you do the math?
A diur mugan agreement looks like housing, but it is a pricing machine. Israel’s Ministry of Health describes routes where you pay a large deposit plus a monthly maintenance fee, or you pay higher monthly rent, or you pay an entrance sum that is gradually depleted. The contract decides which formula applies and what happens when you leave. (Ministry of Health)
Two families can tour the same building, see the same lobby, eat in the same dining room, and hear the same presentation. They can still sign two different routes. One family believes they bought in. The other believes they are renting. When life changes and someone asks what comes back at the end, the contract becomes decisive.
What payment routes are most common in Israel’s assisted living market?
The Ministry of Health describes three common routes: a deposit route with a large deposit and a fixed yearly deduction, a monthly rent route with higher ongoing payments, and an entrance fee route where a one time payment is consumed over time. Each route shifts risk, so the agreement must spell out deductions, indexation, and exit terms. (Ministry of Health)
| Criteria | Deposit route | Monthly rent route | Entrance fee route |
|---|---|---|---|
| What you pay | Large deposit plus monthly maintenance | Higher monthly payments plus maintenance | One time sum plus monthly payments until depleted |
| What can sting later | Deposit erosion, refund delays, deductions | Rising monthly burden over many years | Unclear depletion rules and exit penalties |
| Clause that matters most | Deposit protection and refund timetable | Increase limits and exit terms | Depletion schedule and early exit terms |
| Best for | Owners funding via assets who want lower monthly cost | Non owners with income who want minimal upfront cost | People who want simplicity and accept faster drawdown |
The route itself is not good or bad. It simply determines which clauses must be airtight.
What stops your deposit from becoming unsecured money in someone else’s business?
Israeli law draws a clear line. Once a facility holds more than 7% of your deposit or 70,000 shekels, it must provide a legal security such as a registered mortgage or a bank guarantee. Residents cannot waive this protection. The agreement must name the security, and you must receive proof it exists.
Security means a legal tool you can enforce even if the operator has financial trouble. The framework allows for registered mortgages, temporary guarantees during construction, bank guarantees, or transferring defined portions of the deposit to a trustee. The option to waive security was removed by law.
At what deposit size does the 70,000 shekel cap matter more than the 7% cap?
The trigger is the lower of 7% or 70,000. The breakpoint is a one million shekel deposit.
- Breakpoint deposit: 70,000 ÷ 0.07 = 1,000,000 shekels
- Deposit of 500,000: 7% equals 35,000
- Deposit of 3,000,000: 7% equals 210,000, so the trigger is 70,000
The law focuses on what the operator holds without security, not the headline deposit.
When do you get the deposit back, and what should the refund clause say?
The law requires the operator to return the remaining deposit after the agreement ends, no later than the later of apartment hand back or contract termination. If the resident dies, the refund must be paid to heirs within 30 days after the inheritance order is presented. The amount is linked to the Consumer Price Index. (Government of Israel)
The contract must define the trigger, the deadline, and the documents that start the clock.
What is Consumer Price Index linkage?
Index linkage means the refund moves with inflation using Israel’s official index. The agreement should state the base index month, the refund index month, and the calculation method. Vague wording is insufficient. (Government of Israel)
What counts as a maintenance fee, and how can it rise?
Maintenance fees cover ongoing operating costs and services. Increases are generally limited to CPI changes unless operating costs change and the agreement sets a maximum rate. Operators must provide a written breakdown of components. (Government of Israel)
Every monthly charge must be labeled. Optional services must be priced separately and accepted in writing.
Where do surprise deductions come from?
Disputes usually come from vague terms like wear and tear or reasonable repairs. The solution is documentation: move in condition reports with photos, move out inspections, third party invoices, and caps on deductions.
How do you make wear and tear measurable?
Measure by documented condition, not opinion. If proof is missing, the default should be no deduction.
Which documents should be attached before signing?
- The full signed resident agreement with all appendices
- House rules as a separate signed document (Ministry of Health)
- A payment schedule matching the contract
- Written breakdown of monthly charges (Government of Israel)
- Proof of deposit security
- Temporary guarantees if construction is ongoing
How big is the deposit economy in Israel’s protected housing sector?
Government analysis notes roughly 100 facilities with about 15,000 apartments and 14,500 residents. Deposits range from 0.5 to 3 million shekels, implying a deposit exposure of approximately 7.25 to 43.5 billion shekels. (Ministry of Health)
This scale explains why protections exist and why precision matters.
Glossary
- Diur mugan: Protected housing regulated by Israeli law. (Ministry of Health)
- Deposit: A large upfront payment that is partially refundable. (Ministry of Health)
- Security: A legal protection backing the deposit.
- First mortgage: A top priority registered claim.
- Bank guarantee: A bank backed promise to pay.
- Trustee: A third party holding rights or funds.
- Maintenance fee: Ongoing monthly payments governed by law and contract. (Government of Israel)
- Consumer Price Index: Israel’s official inflation measure. (Government of Israel)
The confident wrap up
Israel built real protections for seniors because the stakes are real. Your task is to make the agreement measurable: named security, dated refund clock, labeled monthly charges, and documented deductions. Do not sign until every required attachment exists.
Too Long; Didn’t Read
- The deposit is only safe if security is named and proven.
- Refund clauses must include timing and CPI linkage. (Government of Israel)
- Maintenance fees must be itemized and limited.
- Deductions must be evidence based.
- Demand all attachments before signing.
