Daniel sent us this one — he's been neck-deep in the Israeli rental market, and honestly, it sounds less like a housing search and more like an exercise in legal hazing. He's describing contracts where landlords hand tenants a document that says, in effect, please sign away every protection the law gives you. Clauses that negate tenant protection statutes, shift liability for ordinary wear and tear onto the renter, the whole adversarial playbook. And his core question is, how have different jurisdictions dealt with this mechanism — contracts that try to frustrate laws passed by the legislature? Because here's the twist. Even when a clause is legally unenforceable, de facto mechanisms keep it alive. His example, Israel banned landlords from charging tenants realtor's fees. Agents created a phony contract where the tenant fictitiously hires them. And if you challenge it, you simply don't get the apartment.
This is one of those areas where the gap between what the law says and what actually happens on the ground is the entire story. And Daniel's framing is sharp — the fact that merely asking someone to sign away legal obligations isn't itself a cause for action. That's the thing that sits with me.
Because the ask itself is the harm.
And most systems treat the ask as harmless until someone actually tries to enforce the unenforceable clause. Which misses the point entirely when the power imbalance is so stark that nobody ever challenges it.
Where do we start with this?
I want to start with a jurisdiction that took the problem seriously decades before most places even acknowledged it existed. The German Civil Code has a provision — section three hundred seven — that governs standard form contracts. It essentially says, if a clause in a standard contract disadvantages the other party contrary to good faith, it's void. But they didn't stop at voiding the clause. They built an entire institutional apparatus around it.
What kind of apparatus?
Consumer protection associations and tenants' associations have standing to bring injunction actions against landlords who use illegal clauses. They don't need an individual tenant to complain. They can scan rental contracts, spot the offending language, and sue to have it struck down across the board. The landlord gets an injunction, and if they keep using the clause, they face fines. Sometimes substantial ones.
They flipped the burden. Instead of expecting a desperate apartment hunter to litigate against their prospective landlord, they deputized organizations to police the market.
And it works because it changes the economics of drafting an illegal contract. If you're a landlord in Germany and you slip an unenforceable clause into thirty leases, you don't just risk losing one case if a tenant complains. You risk a consumer group coming after you for all thirty, plus an injunction, plus penalties, plus having your name dragged into a published decision. The calculus flips.
What kinds of clauses get struck down?
There's a whole body of case law. Clauses that try to shift repair obligations for things that are clearly structural. Clauses that impose blanket renovation requirements at move-out regardless of condition. Clauses that try to limit the landlord's statutory duty to maintain the property. The Federal Court of Justice has published volumes of decisions cataloguing specific language that's impermissible. And the tenant associations maintain databases of these decisions and actively hunt for them in contracts.
It's not just a legal framework. It's a monitoring ecosystem.
That's the phrase. And the contrast with Israel is stark, because in Israel the law on paper actually isn't terrible. The Tenant Protection Law — the 1972 statute — and various amendments do provide some baseline protections. But enforcement is almost entirely dependent on individual tenants bringing claims. And the structural reality Daniel described means that rarely happens.
Because challenging the contract means losing the apartment.
Before you even get the apartment. The screening process filters out anyone who pushes back. So the illegal clauses function as a sorting mechanism. Landlords don't need them to be enforceable. They just need them to be intimidating enough that the people who would challenge them self-select out.
Which is a darker version of contracting than most people imagine. The contract isn't a mutual agreement. It's a filter for compliance.
That's what makes the German approach interesting. They recognized that individual enforcement is a fantasy in a market with asymmetrical power. So they built collective enforcement. It's not perfect, but it addresses the core problem Daniel identified — that the mere act of asking someone to sign away legal protections should carry some risk for the asker.
Let me ask you about the realtor's fee example, because that one's particularly galling. The law says landlords pay. The market says tenants pay, but through a legal fiction where the tenant nominally hires the agent.
This one drives me up the wall. In twenty seventeen, Israel amended the law to prohibit real estate agents from charging tenants a fee when the agent was hired by the landlord. The agent works for the landlord, the landlord pays. But within weeks, the industry adapted. They started presenting tenants with a separate agreement — essentially saying, you, tenant, are hiring us to find you an apartment. Never mind that the same agent is already working for the landlord on the same property. It's a transparent fiction.
The enforcement mechanism isn't a court. It's the key to the apartment.
The agent says, sign this or I'm not processing your application. And the tenant, who's probably seen a dozen apartments and is exhausted and needs a place to live, signs. The law is technically on the books. The practice is unchanged.
What does Germany do with something like that?
Germany took a different approach to agency fees altogether. In twenty fifteen, they introduced the bestellerprinzip — the orderer principle. The rule is straightforward: whoever orders the service pays for it. If the landlord hires the agent, the landlord pays. No workarounds, no separate agreements, no legal fictions. And they didn't just pass the law and walk away. They paired it with enforcement mechanisms. Consumer groups can sue. Agents who violate it face fines. And the culture shifted. Before the law, tenants routinely paid fees that could run two or three months' cold rent. After, that vanished practically overnight.
Two or three months' cold rent is enormous.
In cities like Munich or Berlin, we're talking thousands of euros. And it was just accepted as the cost of finding housing. The law changed that not because tenants suddenly got litigious, but because the enforcement structure made noncompliance expensive for agents.
This is where I want to probe something. You mentioned culture shifted. Was that a consequence of the law, or did the law pass because the culture was already shifting?
I think it was both. There had been tenant activism for years. The rental market in German cities was tightening, and there was a growing sense that the balance had tipped too far toward landlords. The bestellerprinzip passed in a political moment where tenant protections were popular. But the law itself then accelerated the cultural shift. Once agents stopped charging fees and the sky didn't fall, the idea that tenants should pay became retroactively absurd.
Like adopting a feral cat. Once it's inside and you realize it's not destroying the furniture, you forget why everyone said it was a terrible idea.
And that pattern shows up in a lot of tenant protection reforms. The opponents predict disaster — landlords will exit the market, construction will collapse, rents will skyrocket. Then the law passes, and the disaster doesn't materialize, and five years later nobody remembers what the fuss was about.
Where does that prediction fail? Because I assume somewhere it actually did go wrong.
The cautionary example people usually reach for is rent control — and I want to be careful here, because rent control and contract-term regulation are different things. But since you asked, let's talk about Sweden briefly.
Sweden has had rent control since the nineteen forties. Not just stabilization, but a system where rents are collectively bargained between tenant unions and landlord associations. The intention was to keep housing affordable. The effect, at least in Stockholm, has been a queue for rental apartments that's now running somewhere around twenty years on average.
That's not a queue. That's a waiting list for a different phase of life.
People put their names on the list when they're eighteen and hope to get an apartment by the time they have teenage children. And the secondary effect is a massive black market for lease transfers. People pay under-the-table fees to take over leases. Illegal sublets are rampant. The system that was designed to protect tenants has created a two-tier market where insiders with old leases pay far below market and everyone else is locked out.
The Swedish cautionary tale is that when you suppress the price mechanism too aggressively, you don't eliminate the market. You just drive it underground.
You create perverse winners and losers. The winners are people who've held leases for decades. The losers are young people, immigrants, anyone trying to move to the city for work. It's deeply regressive in practice, whatever the intent was.
That's rent control. The topic here is contract terms — illegal clauses, liability shifting, the stuff Daniel's dealing with. Does regulating contract terms carry the same risk?
No, and this is a distinction that gets muddied in a lot of coverage. Rent control affects the price. Contract-term regulation affects the allocation of rights and responsibilities within the lease. The argument against rent control is that it distorts supply and demand. The argument against illegal contract terms is... That landlords should be allowed to contract around the law?
Some would say freedom of contract. If two parties agree to terms, even terms that waive certain protections, why should the state intervene?
Because the premise of freedom of contract is that both parties are freely consenting. And the entire setup Daniel described is one where consent is coerced by market necessity. Nobody freely consents to pay a realtor's fee that the law says the landlord owes. They pay it because the alternative is not having a home.
That's the philosophical core of it. At what point does a contract stop being an agreement and start being an ultimatum?
Different legal systems draw that line in different places. The common law tradition — England, the United States, Australia — has the doctrine of unconscionability. A contract or clause can be voided if it's so one-sided that it shocks the conscience. But unconscionability is an equitable doctrine, applied by judges case by case. There's no systematic screening. It requires a tenant to go to court and argue that the clause is unconscionable, which is expensive and uncertain and — back to the core problem — not something you do when you're trying to secure housing.
It's a remedy that exists in theory and almost never in practice for residential leases.
For residential leases, exactly. Commercial tenants with lawyers on retainer use unconscionability arguments all the time. Residential tenants with two thousand shekels in the bank and a move-in date next week do not.
What about the UK specifically? They've had some movement on tenant fees recently.
The Tenant Fees Act of twenty nineteen. This is a really clean example of what Daniel's asking about — a jurisdiction that looked at the problem and decided to just ban the behavior outright rather than rely on ex post enforcement. The Act prohibits landlords and agents in England from charging tenants any fees except for rent, a refundable deposit capped at five or six weeks' rent, and a few specific things like late payment charges and key replacement. Everything else — application fees, credit check fees, inventory fees, cleaning fees — banned. And the enforcement mechanism is that if a landlord charges a prohibited fee, they can't serve a valid eviction notice until they repay it.
That's clever. They tied the remedy to something the landlord actually wants.
The landlord's ability to regain possession is conditional on compliance. And local trading standards authorities can impose fines up to thirty thousand pounds for repeat offenses. The system doesn't depend on tenants suing.
Has it worked?
The evidence from the first few years is promising. Tenant fees dropped dramatically. The market adjusted. Agents who previously built their business models around fee income shifted to landlord-side charges. Some agents went out of business, but the rental market didn't collapse. And anecdotally, the practice of demanding fees just evaporated. It became simply not how things are done.
Which brings us back to the realtor's fee situation in Israel. The law banned the practice, but the practice continued through a legal fiction. What was missing?
One, the ban didn't have teeth. The penalty for violating it wasn't meaningful enough to change behavior. Two, there was no enforcement body actively policing the market. It relied on individual complaints. Three, the legal fiction — the phony hiring agreement — created enough of a fig leaf that agents felt comfortable continuing. They weren't openly defying the law. They were complying with its letter while gutting its purpose.
The letter versus the purpose. That's the whole game.
It is, and it's why drafting matters enormously. If you write a law that says agents can't charge tenants fees, agents will charge tenants fees under a different name. If you write a law that says whoever hires the agent pays, and you back it with enforcement, the workaround collapses.
Let's broaden this out. Are there jurisdictions that have gone even further — made the mere act of presenting an illegal contract a violation in itself?
There's movement in that direction in a few places. Quebec has some of the strongest tenant protections in North America, and their rental board, the Tribunal administratif du logement, can impose penalties on landlords who include illegal clauses in leases. It's not just that the clause is void. The inclusion itself can be penalized.
What's the standard? Does the landlord have to know the clause is illegal?
In Quebec, the standard is essentially strict liability for certain types of clauses. If the clause is on a list of prohibited terms, it doesn't matter if the landlord claims they didn't know. The clause is in the contract, the landlord drafted it, and the landlord is responsible. The tribunal has published clear guidance on what's prohibited, so ignorance isn't much of a defense.
That shifts the burden of legal knowledge onto the party with more power. Which seems right to me. If you're running a business renting out property, knowing the law is part of the cost of doing business.
This is where I think Daniel's instinct is correct — that merely asking another party to sign away legal obligations should be actionable. It's not a radical idea. We do this in consumer protection law all the time. If a car dealership puts an illegal waiver in a sales contract, they can face penalties from the Federal Trade Commission or state attorneys general, even if no consumer was actually harmed by it. The deception is in the presentation.
Why is residential tenancy different? Why do we treat housing contracts as more sacrosanct than car sales?
I think there are a few reasons. One is historical — landlord-tenant law evolved from property law, not consumer law. The landlord wasn't seen as a service provider selling a product. They were the owner granting a temporary right of occupation. The conceptual framework was feudal, not commercial.
The lord of the manor doesn't have consumer protection obligations.
And the residue of that framework persists. Even though renting is clearly a commercial transaction — money in exchange for habitation — the law in many jurisdictions still treats the lease as a conveyance of an interest in land, not a contract for services. That's slowly changing, but it's uneven. The second reason is that housing is local. Consumer protection can be national — the FTC can go after a car dealership in any state. But rental markets are regulated by municipalities and states and regional bodies, and the political economy of landlord-tenant law varies enormously by jurisdiction. The result is a patchwork.
A patchwork is easier to exploit than a uniform standard.
If you're a landlord in a jurisdiction with weak enforcement, you can include clauses that would be illegal in a stronger jurisdiction, and the worst that happens is the clause gets struck down if a tenant challenges it. Which they won't.
Let me bring in something from the other side of the world. I know you've looked at Australia.
Australia's interesting because it's a federation, so rental law varies by state, but there's been a wave of reforms in the last five or six years. Victoria, in particular, has been aggressive. In twenty twenty-one, they introduced minimum standards for rental properties — things like working heating, adequate ventilation, freedom from mould — and made them mandatory. Landlords can't contract out of them. And the enforcement body, Consumer Affairs Victoria, can issue compliance orders and penalties. They also banned a list of specific lease terms. No-win no-fee clauses that make tenants pay the landlord's legal costs regardless of outcome. Clauses that require tenants to pay for professional carpet cleaning at the end of the lease regardless of condition. Clauses that impose penalties for breaking the lease that exceed the landlord's actual losses. And the state has a rental task force that can investigate and penalize landlords who use them.
A rental task force. That sounds like the monitoring ecosystem you described in Germany.
It's a similar concept. Dedicated enforcement capacity. Not just a law on the books and a hope that tenants will enforce it.
The pattern across effective jurisdictions seems to be three things. Void the illegal clause, sure — that's the baseline. But then add collective enforcement through tenant associations or government bodies. And in the strongest cases, penalize the inclusion itself.
That's the framework. And the fourth element, which is harder to legislate but shows up in the successful cases, is standardization. If the default lease is set by regulation — here's the template, use it or face scrutiny — then landlords who deviate have to justify the deviation. Germany has this to some extent. So does Ontario, where the Residential Tenancies Act provides a standard lease form that landlords must use for most tenancies.
Not may use.
And if the landlord doesn't use the standard form, the tenant can demand one, and if the landlord doesn't provide it within twenty-one days, the tenant can withhold rent. It's a compliance mechanism that doesn't require a lawyer or a tribunal hearing. And the standard form itself incorporates the statutory protections. The landlord can't strip them out because they're baked into the template. If you want to add additional terms, they have to be consistent with the Act and they're on a separate schedule. The baseline is non-negotiable.
Daniel mentioned that in Israel, the expectation is that the tenant will draft back edits and hope the landlord accepts them. That's a bizarre norm when you think about it. The party with less power is expected to redline the contract.
It's completely backwards. The party with more power, more resources, and more experience should be presenting a legally compliant contract in the first place. The fact that tenants are expected to negotiate their way back to baseline legality is — what was the phrase Daniel used? A dismal indictment.
It also advantages sophisticated tenants over unsophisticated ones. If you're a lawyer, or you have a lawyer friend, or you've rented many times and know what to look for, you might push back and get some clauses struck. If you're a new immigrant, or a student, or someone renting for the first time, you sign what's put in front of you.
The people most vulnerable to illegal clauses are the least equipped to identify them. That's not a bug. It's the feature that makes the whole system work for the people who benefit from it.
Let me poke at something. You've described a bunch of jurisdictions that have strong tenant protections and enforcement. Are there any that have gone too far? Where the protections are so strong they've created the Swedish queue problem, but for contract terms rather than price?
It's a fair question. I don't think contract-term regulation creates the same kind of supply distortion that rent control does, but there is a version of this that can go wrong. If the regulatory burden on landlords becomes so heavy that small landlords exit the market, you can end up with more concentration. Institutional investors with compliance departments can handle the paperwork. The grandmother renting out her former home cannot.
Concentration is its own problem.
Institutional landlords have their own pathologies — algorithmic pricing, less flexibility, less human relationship. So there's a balance to strike. The regulations need to be clear enough that a small landlord can comply without hiring a lawyer, and the penalties need to be proportionate enough that an honest mistake doesn't wipe someone out.
Is there a jurisdiction that's struck that balance well?
I think Scotland is worth mentioning here. They introduced a new private residential tenancy in twenty seventeen that replaced the old assured shorthold tenancy. The new tenancy is open-ended — no fixed terms, no no-fault evictions at the end of a term. Landlords can only evict on specific grounds, and there are eighteen of them defined in the legislation. The contract terms are largely set by statute, so there's minimal room for landlords to insert abusive clauses.
Small landlords haven't fled?
There was some exit initially, but the market stabilized. What helped was that the Scottish government ran an information campaign and provided model leases and guidance. The compliance cost wasn't zero, but it wasn't prohibitive either. And the system has a tribunal — the First-tier Tribunal for Scotland — that's designed to be accessible to tenants without legal representation. The procedures are simplified. The forms are online. The decisions are published.
Accessible tribunals keep coming up. That seems to be the linchpin. You can have the best laws in the world, but if enforcing them requires hiring a lawyer and spending two years in court, they're ornamental.
Ornamental is exactly right. And this is the Israeli problem in a nutshell. The laws exist. The Tenant Protection Law is there. The ban on realtor's fees is there. But the enforcement infrastructure isn't. There's no dedicated rental tribunal with streamlined procedures. There's no government body actively scanning leases for illegal terms. There's no tenant association with standing to bring injunction actions. The laws are ornamental, and the market treats them as such.
What would a serious reform look like, applied to the situation Daniel described?
I'd start with three things. First, a mandatory standard lease. If you're renting residential property in Israel, you use the standard form. Deviations require justification and are void if they reduce tenant protections. That alone would eliminate most of the abusive clauses overnight, because landlords couldn't slip them in without actively amending a document that's designed to be protective.
A rental tribunal with simplified procedures. No requirement for legal representation. The power to order compliance, award compensation, and impose fines for illegal clauses. And the fines need to be meaningful — not a cost of doing business, but an actual deterrent.
Standing for tenant organizations to bring enforcement actions. Let the organizations that represent tenants' interests scan the market, identify problem landlords, and bring complaints. You don't need every tenant to become a litigant. You need a few dedicated organizations that can act on behalf of the class.
The German model.
Adapted to Israeli conditions, yes. Israel actually has a fairly robust non-profit sector. Organizations that work on housing issues exist. What they lack is the legal standing and the institutional framework to enforce tenant protections systematically.
Let me ask you about the political feasibility of all this. Israel's had a chronic housing shortage for years. Prices keep rising. Construction isn't keeping up with population growth. In a market where demand wildly exceeds supply, landlords have the upper hand. Why would the political system bite the hand that houses it?
Because tenants vote. And tenants are a growing constituency. Homeownership rates among young Israelis have been declining. The rental population is larger and more politically significant than it was a generation ago. We've seen tenant movements emerge in Tel Aviv around rent strikes and housing protests. The political calculus is shifting, slowly.
The twenty eleven protests were largely about housing costs, weren't they?
They were, and they were enormous — hundreds of thousands of people in the streets. The immediate policy response was underwhelming, but it put housing on the political agenda in a way it hadn't been before. Since then, you've seen incremental reforms — the realtor's fee ban, some changes to rental regulations. But the enforcement gap remains.
The political will exists in some form. What's blocking it?
I think part of it is that contract-term abuse is less visible than price. Rents going up is something everyone sees and feels. An illegal clause in a lease is something you discover when you're already stressed and moving and just need to get the keys. It's a quieter harm. Less politically salient. Also, the people most affected are often transient — students, young workers, immigrants. Not the most reliable voting bloc. And landlords, as a group, are more concentrated and more organized. A reform that threatens their ability to shift costs onto tenants will face organized opposition. The realtor's fee ban was fought hard by the real estate industry, and they found the workaround within weeks. A more comprehensive reform would face even more resistance.
Which brings us back to Daniel's original point — that merely asking someone to sign away legal protections should be a cause for action. Do any jurisdictions actually do that in a meaningful way?
The closest examples are the ones where including a prohibited clause is itself a violation subject to penalties, regardless of whether anyone was harmed by it. Quebec does it. Victoria does it. Germany effectively does it through the injunction system. But none of them go as far as creating a private right of action for the mere presentation of an illegal contract. That would be novel.
Novel but coherent. If we accept that the purpose of consumer protection law is to prevent deception and exploitation before harm occurs, then penalizing the presentation of an illegal contract makes sense. You don't wait for someone to eat the contaminated food before you penalize the restaurant for serving it.
The food safety analogy is apt. We don't require dinner guests to sue the restaurant after they get sick. We have health inspectors who check the kitchen proactively. The inspection itself is the enforcement mechanism. The rental market equivalent would be a body that reviews lease templates and issues compliance orders before tenants sign them.
Has anyone tried that?
There are elements of it in some systems. In Germany, tenant associations effectively do this by reviewing contracts and publishing guidance. But it's not a government function. It's civil society filling the gap.
Which works when civil society is strong and well-resourced. When it's not, the gap remains.
That's the implementation question. You can design the perfect regulatory framework on paper. If you don't fund the enforcement, you've designed a suggestion.
A suggestion with the force of law but the effect of a suggestion.
Which is roughly where Israel is now. The realtor's fee ban is a suggestion that the market has collectively decided to ignore, dressed up in a legal fiction that everyone knows is a fiction.
Do you see any movement toward closing that gap?
There have been some class action attempts around the realtor's fee issue. A few cases have been filed arguing that the phony hiring agreements are void and that tenants should be reimbursed. The outcomes have been mixed — some settlements, some ongoing litigation. But class actions are slow, expensive, and retrospective. They don't change the practice going forward until they succeed, and even then, enforcement is uncertain.
We're back to the structural problem. Individual enforcement doesn't work. Collective enforcement is underdeveloped. The laws are ornamental.
That's the diagnosis. And I want to be clear — this isn't unique to Israel. Many jurisdictions have ornamental tenant protections. The United States has plenty of them. Even in states with relatively strong tenant laws, enforcement is spotty, and illegal clauses in leases are common. The difference is one of degree, not kind.
The degree matters. Daniel's description of the Israeli rental market — the adversarial contracts, the phony hiring agreements, the expectation that tenants will negotiate their way back to legality — suggests a market where the norms have drifted far from the law.
The norms have replaced the law. That's the deeper problem. When the gap between law and practice becomes wide enough and persistent enough, the law loses its normative force. People stop expecting compliance. They expect workarounds. And the workarounds become the real rules.
Which is corrosive beyond the rental market. If people learn, through repeated experience, that the law is a fiction that powerful parties can ignore, they apply that lesson elsewhere.
That's the spillover effect. Cynicism about law is learned behavior. And housing is one of the most frequent and consequential interactions people have with contracts and legal obligations. If that interaction teaches you that the law doesn't matter, that's a lesson that sticks.
What's the counter? If you were advising a jurisdiction that wanted to get serious about this, where would you tell them to start?
I'd tell them to start with the standard lease. It's the simplest, cheapest intervention with the broadest impact. Require landlords to use a government-drafted lease that incorporates statutory protections by default. Make deviations from the standard lease void unless they benefit the tenant. Publish it in multiple languages. Make it freely available. And pair it with a public information campaign so tenants know what the standard lease looks like and can recognize when a landlord is deviating from it.
The information asymmetry is part of the power imbalance.
It's a huge part. Most tenants don't know what the law entitles them to. They don't know which clauses are illegal. They don't know that signing an illegal clause doesn't make it enforceable. Landlords and agents know all of this and exploit the gap in knowledge.
The standard lease closes that gap, at least partially. If the default document is protective, and the landlord hands you something different, that's a signal.
A signal you can act on. Even if you don't challenge it directly, you know something's off. And over time, as the standard becomes familiar, the landlord who deviates looks suspicious. The norm shifts.
From adversarial contracts as standard to protective contracts as standard.
That's the goal. It's not a complete solution — you still need enforcement, you still need tribunals, you still need collective action. But it sets the baseline. And right now, in markets like Israel's, the baseline is whatever the landlord's lawyer can get away with.
The tenant's job is to figure out which parts are illegal and negotiate them out, while simultaneously trying to convince the landlord to rent to them.
While packing boxes and arranging movers and probably arguing with their previous landlord about the security deposit. It's a system designed to extract maximum concessions from the party with minimum leverage.
To pull this together for the question Daniel asked — how different jurisdictions have grappled with contracts that frustrate legislative intent — the spectrum seems to run from basically ornamental protections to integrated enforcement ecosystems. Israel's on one end. Germany, Scotland, Victoria, Quebec are further toward the other. And the key variables are mandatory standard leases, accessible tribunals, collective enforcement standing, and meaningful penalties for inclusion.
That's the framework. And I'd add one more variable: political salience. The jurisdictions that have made the most progress are ones where tenant protections became a political issue that couldn't be ignored. In Germany, tenant associations have been powerful since the post-war period. In Scotland, the reform was part of a broader push on housing rights. In Victoria, a series of horror stories about slum conditions created the political pressure for minimum standards.
The question for Israel is whether the political salience is there yet. The twenty eleven protests suggest the kindling is there. But it hasn't caught fire in a way that produces the institutional reforms we've been describing.
And I say yet because the underlying conditions are intensifying, not improving. Housing costs keep rising. The rental population keeps growing. The gap between law and practice keeps widening. At some point, the pressure finds an outlet.
Or it doesn't, and people just live with the dysfunction.
Which is also possible. Plenty of dysfunctional systems persist for decades because the cost of fixing them seems higher than the cost of enduring them. But the cost of enduring them is real. It's paid in stress, in money, in time, in the slow erosion of trust that the law means anything.
In the specific case of the realtor's fee dodge, it's paid in cash, upfront, to someone who's legally not supposed to be charging you.
Thousands of shekels, in many cases. For a service you didn't ask for and the law says you don't owe. That's not a minor inconvenience. That's a significant extraction from people who are already stretched thin by the cost of housing.
The extraction works because the alternative — challenging it — costs you the apartment. The market enforces the illegal practice more effectively than the law enforces the legal prohibition.
That's the asymmetry in a sentence. The market enforces the illegal practice. The law doesn't enforce the legal prohibition. And until that asymmetry is addressed, the specific reforms we've discussed — standard leases, tribunals, collective enforcement — are rearranging deck chairs.
Or they're building the ship that hasn't sailed yet. I'm slightly more optimistic than you on this one.
That's rare.
I think the standard lease, in particular, is a lever that punches above its weight. Because it changes the default. Right now, the default in Israel is an adversarial contract. The tenant has to fight back to baseline legality. Flip the default — make the standard lease the starting point — and the landlord has to actively deviate to introduce illegality. That's a different psychological and practical dynamic. The landlord who hands you a non-standard lease is now the one making an ask. And the ask is visible.
That's a fair point. Defaults matter enormously in contract design. People tend to stick with the default. If the default is protective, most leases will be protective.
The landlord who insists on deviating is signaling something. You might still sign, because you need the apartment, but you know what you're signing. The information asymmetry narrows.
It's not a complete solution, but it's a high-impact, low-cost intervention. I'd still want the enforcement infrastructure behind it, but I take your point that the standard lease alone would shift the equilibrium.
We should probably acknowledge that we've been talking about this for a while and haven't even touched on some of the other mechanisms Daniel alluded to. The wear-and-tear liability shifting, for instance.
That one's particularly egregious because it reverses the basic common law principle that landlords are responsible for maintaining the property. In Israel, the Tenant Protection Law places certain maintenance obligations on the landlord. But I've seen clauses where the tenant agrees to be responsible for all repairs, including structural ones, including pre-existing defects. It's absurd on its face, but it's in the contract, and the tenant signs it.
The enforcement mechanism is the security deposit at the end of the lease. The landlord deducts for ordinary wear and tear, and the tenant's choice is to accept the deduction or sue.
Suing costs more than the deduction. So the illegal clause is enforced through self-help. The landlord keeps the money. The tenant walks away.
Covering the covers. The law covers the tenant. The contract covers the law. The deposit deduction covers the contract.
That's distressingly accurate. And it's why the enforcement question is the whole question. Without a cheap, fast way to challenge illegal deductions, the substantive protections don't matter.
We've been at this for a while. Should we try to land somewhere?
Let me try to synthesize. Daniel asked how different jurisdictions grapple with contracts that frustrate legislative intent. The answer, at a high level, is that they do it through some combination of four things. Voiding the illegal clause — that's universal, but insufficient on its own. Making the inclusion itself penalizable — that's the Quebec-Victoria approach. Creating collective enforcement through tenant associations or government bodies — that's Germany and, to some extent, Victoria. And mandating a standard lease that bakes in the protections — that's Ontario and, increasingly, Scotland. The jurisdictions that do two or more of these things have largely functional systems. The jurisdictions that do only the first — void the clause but leave enforcement to individuals — have ornamental protections.
Israel, on this analysis, is in the ornamental camp. Laws exist, but the enforcement infrastructure doesn't.
