Over the past decade, urban renewal has become one of the key phenomena in Israel’s real estate market. More and more evacuation-reconstruction and Tama 38 projects are being launched with the aim of reinforcing old buildings, optimizing land use, and increasing the housing supply - while also ensuring a significant upgrade in tenants’ quality of life. However, as the opportunities grow, so do the concerns: delayed projects, collapsed contractors, vanished developers, and tenants left stranded - without an apartment and without security.
At the center of this discussion lies the bank financing document - a financial tool that was once seen as a “technical” matter between the bank and the developer, but is now becoming one of the most important sources of power in the hands of tenants.
Bank financing is a process in which a bank accompanies the project, oversees it, and ensures that there is adequate funding for its construction. To this end, a financing agreement is signed between the bank and the developer, which also includes sale law guarantees to protect the tenants’ rights. This provides critical security: if the developer collapses, tenants are not left in limbo - the bank is obligated to complete the project or return the tenants’ money.
Power - or Illusion?
In the past, bank financing documents were considered the domain of the big players: banks, developers, lawyers. But today, more tenants understand that they are a significant party to the deal - and that they have the right to know, to ask, and to demand. Understanding the financing documents allows tenants to verify that the project is financially sound, that the guarantees cover all new apartments, and that they are not solely dependent on the developer’s “goodwill.” This is not just a legal document - it’s a tool for influence and enforcement.
In recent years, a new, complex, and sometimes problematic trend has emerged: tenants view bank financing as a lever to change the terms of the agreement - even at a very late stage, sometimes right before execution or even after a binding agreement has been signed. They believe that once the bank enters the picture, additional pressure can be applied to change the terms - whether in the specifications, the rights, or the timelines.
But this approach is dangerous for both sides. A substantial change in terms after closure can undermine the developer’s trust and even threaten the very existence of the project. Moreover, a financing bank does not enter the process to negotiate with tenants, but to ensure that the project meets financial and legal criteria. Using financing as a late-stage bargaining tool may end up harming the tenants themselves.
Timing Is Key
The transformation of the bank financing document into a transparent and accessible tool for tenants is a welcome development - but also one that requires caution, understanding, and the right timing. The power to influence does exist - but it must be exercised before signing, with legal counsel, and in coordination with all parties involved. Once the contract is signed, the rules change - and the process becomes a binding agreement in every sense.
Attorney Avi Antebi, who represents tenants in urban renewal projects, clarifies that bank financing, beyond being the project’s “insurance policy,” serves as an additional set of eyes for the tenants, examining the project's financial viability, the developer’s financial strength, and distinguishing between a project that looks good on paper and one that is actually implemented.
“Tenants must remember that bank financing serves them no less than it serves the developer, and it is more important than any additional benefit in the compensation package,” Antebi said. “ At the end of the day, tough negotiations and high compensation mean little if the project fails to pass the financing bank’s scrutiny.”
In Conclusion, the urban renewal revolution will not be completed through laws and master plans alone, but also by empowering the tenants themselves. Bank financing documents are no longer a side matter - they are at the heart of the deal. Once tenants understand them, review them, and demand their rights, they move from being passive participants to active players with real power. At the same time, it’s important to remember that power, as always, requires responsibility - and using it at the wrong time can come at a heavy cost.
Written by: Avi Levy, CEO of Yehuda Levy Group