Israeli Court: Parents May Reclaim Property Gifted to Son and Daughter-in-Law After Divorce

The Family Court ruled that a deed of commitment signed by the parents and the couple remains valid, even in the event of property partition during divorce. The ruling means that the parents, who gave their son and daughter-in-law a plot as a gift, are entitled to reclaim it as long as one of them is alive, provided they pay the value of the house built on the plot, as determined by an appraiser. The court rejected the daughter-in-law’s claims, clarifying that this was a conditional gift allowing the parents to reclaim the land in case of a change in property rights.

By Dror Nir Castel, Nadlan Center

The Family Court in Ashdod, in a ruling by Judge Rami Be’ja, recently resolved a bitter family dispute. The case followed a lawsuit filed by parents against their son and daughter-in-law, seeking to enforce a deed of commitment signed years earlier as part of a gift agreement, under which a plot they had transferred to the couple would be returned to them. The judge accepted the parents’ position and ruled that this was a conditional gift — if the couple sold the house built on the gifted plot while one of the parents was still alive, they would have to return the land to the parents and receive only the value of the house built on it.

The parents, evacuees from Gush Katif, had received a plot from the state for construction. Their son and daughter-in-law, who were married in 2005 and have six children, built their home a decade later on part of the plot with their parents’ consent. After construction was completed in 2017, the parents and the couple signed a gift agreement transferring the leasehold rights in the plot and house to the couple.

That same year, a deed of commitment was also signed, stipulating that in the event of a sale of the property, the parents would have the first right of purchase against payment of construction value only, or alternatively, to receive their share of the land value from the sale proceeds to a third party. It was also agreed that this right would remain in force as long as the parents were alive, but would not pass to their heirs.

In 2023, the daughter-in-law initiated divorce proceedings, including a request for partition of property. The parents saw this as a breach of the commitment and petitioned the court: they asked to exercise their right of first refusal, appoint an appraiser to assess the house’s value only, and compel the couple to sell them the property at that price.

The court ruled that the parents’ intent was clear: the property gifted to the couple was to remain under their control as long as they were alive, and in case of a sale — it would return to them. The daughter-in-law’s claim that her right of first refusal under the Real Estate Law took precedence was rejected, with the court stating that raising such a claim reflected bad faith.

The son supported his parents’ stance, but the daughter-in-law argued it was an act of vengeance. She claimed the deed of commitment applied only in the case of a sale to a third party, not to a partition of property in divorce. She further argued that under the Real Estate Law, the spousal right of first refusal overrides an unregistered contractual right of first refusal.

Judge: Partition of property is also a sale

Judge Be’ja dismissed the woman’s argument. According to him, partition of property in divorce is essentially a “forced sale” — the property is put up for sale and all co-owners lose their ownership. Therefore, such a process also triggers the parents’ right to enforce the commitment. The court again emphasized that the parents’ intent was clear: the land would remain under their control while alive, and in case of sale — return to them. The daughter-in-law’s claim regarding priority of rights under the Real Estate Law was rejected as made in bad faith.

The court ruled that the parents were entitled to purchase the couple’s rights in the property for the updated house value, with the amount to be divided equally between the son and daughter-in-law. The parents would bear the appraiser’s cost, and the daughter-in-law was ordered to pay 40,000 shekels in legal expenses.

Attorney Daniel Friedenberg, an expert in inheritance and family law, explained that transfers of property from parents to children are typically considered gifts, unless a loan agreement is explicitly signed. “The case law categorizes the transfer of rights between parents and children as a gift unless proven otherwise, and the proper way to prove otherwise is through a written loan agreement. However, in cases where the intention is to give a gift while ensuring property is preserved in the event of separation, there is no barrier to drafting gift agreements that include conditions, provided they are carefully drafted.

“In this case, Judge Be’ja ruled that the clear agreement even overrides the spousal right of first refusal under the Real Estate Law — a claim raised by the defendant (the former daughter-in-law), which drew strong criticism and led to her being ordered to pay significant legal costs.”