Early Lease Exit: When the Landlord Said No to a Replacement Tenant

When a couple renting an apartment in Giv’atayim wanted to leave three months into a twelve-month lease, they offered to find replacement tenants to take over the contract. The landlord refused — insisting she would only agree to a sublet, not a full tenant swap. The tenants left anyway, and the landlord moved to collect on a promissory note (a formal debt instrument signed as security at the start of the lease). This case examines whether a landlord can legally block a tenant from bringing in a replacement, and what happens when a landlord fails to take reasonable steps to limit her own losses.

By Adv. Eden Briel Stoklav

The plaintiff owned a three-room apartment in Giv’atayim. In 2023, the defendants (a couple) signed a twelve-month lease with her. As security for their obligations under the lease, they signed a promissory note — a legally binding document acknowledging a debt that can be enforced through the debt collection office if the tenant defaults.

Three months into the tenancy, the tenants notified the landlord that they intended to vacate the apartment due to personal circumstances. They said they would leave within about a month and would make efforts to find replacement tenants acceptable to the landlord. When the time came, they moved out before the lease term had ended.

Two months after they left, the landlord filed a request with the Tel Aviv Execution Office to collect on the promissory note.

The tenants opposed the collection. They argued that when they first moved in, they discovered dampness stains that had been concealed behind furniture. They also claimed the landlord had withheld material information about the building’s potential inclusion in an urban renewal project (known in Israel as a “pinui-binui” — a government-backed scheme in which residents are relocated so an aging building can be demolished and rebuilt as a larger modern complex).

The tenants said they had actively looked for replacement tenants and were even willing to absorb the financial difference if the replacement paid less rent than they did — covering the shortfall themselves until the end of the lease period. However, they claimed the landlord repeatedly refused to cooperate and actively blocked several prospective tenants from taking over the apartment. On this basis, the tenants argued their early departure was justified by the landlord’s fundamental breach of the agreement.

The landlord, for her part, maintained that the tenants had left unilaterally without her consent and without any connection to the alleged defects, in clear breach of the lease. She also pointed out that the lease itself included an explicit clause stating that the building was designated for a pinui-binui project. As for the tenant replacement issue, the landlord said she had agreed to a sublet arrangement only — not to replacing the tenants outright — and that this right was reserved to her under the lease.

The Legal Question

Did the landlord’s insistence on limiting her consent to a sublet only — and refusing to allow a full tenant replacement — constitute an unreasonable refusal under Section 22 of the Rental and Loan Law?

The Court’s Decision

The court ruled that Section 22 of the Rental and Loan Law is a mandatory provision — meaning the parties cannot override, modify, or waive it by contract. The section provides that a tenant may not transfer a lease or sublet without the landlord’s consent, but also that if the landlord refuses without reasonable cause, the tenant may proceed despite that refusal.

As a result, the court found that the landlord was not entitled to issue a blanket refusal to a tenant replacement — even if the lease said otherwise. After the tenants formally invoked Section 22 in their termination notice, the landlord was required to genuinely and in good faith consider their proposal to bring in replacement tenants. Instead, she consistently insisted on a sublet only. The court found this position unreasonable because it would leave the original tenants on the hook financially while also burdening them with ongoing management responsibilities — as opposed to a clean transfer of the lease to someone new.

The tenants had presented prospective replacement tenants who appeared suitable on their face, but the landlord blocked them. In doing so, the court held, she frustrated both the possibility of reducing her own losses and the continuation of the tenancy through a new tenant.

The court also noted that after the tenants vacated, the landlord admitted she had made no effort to re-let the apartment. Under Israeli law, a party who suffers a breach of contract has a duty to take reasonable steps to minimize their losses. By doing nothing to find a new tenant, the landlord failed to meet that obligation.

As for the claims about dampness defects and the pinui-binui project: the court dismissed these. The pinui-binui issue was explicitly mentioned in the lease, so the tenants could not claim they were unaware of it. The defect claims were not proven to rise to the level of a fundamental breach that would justify termination. Nonetheless, these issues became secondary given the court’s central finding.

The court dismissed the claim entirely. It ruled that the tenants had been entitled to end the lease in the circumstances. The landlord was not permitted to enforce the promissory note, and she was ordered to pay the tenants’ legal costs of NIS 5,000.

[TA (Tel Aviv) 24984-04-24 Nicole Michal Malka v. Ina Diana Ben Harosh, published on Nevo on 11.1.2026].