Many parents finance real estate purchases for their children and register the properties in their children's names. But what happens when a parent later wants to reverse that decision?
In a family dispute that reached Israel's Supreme Court, the court ruled that a father who financed the purchase of a 1.5-dunam (about 0.37-acre) parcel of land and registered it in his son's name could not invalidate the son's subsequent sale of the property to a third party for 200,000 shekels.
The court ruled that a father could not invalidate the son's subsequent sale
(Photo: shutterstock)
The case began with the purchase of a 1,500-square-meter (about 0.37-acre) plot of land. The father paid for and completed the purchase in full, while ownership was officially registered in the son's name with the Israel Land Registry. Years later, the son signed an agreement to sell the property to a third-party buyer for 200,000 shekels.
The father then filed suit in the District Court against both his son and the buyer, seeking to cancel the sale agreement and the cautionary note registered in the buyer's favor. He argued that he was the true owner of the land and that registering it in his son's name had been intended solely as a trust arrangement, meaning the son had no right to sell it. He also maintained that the property had not been given as a gift, saying he had merely wanted to give his children "a good feeling."
The father further argued that he had proved his ownership because he had both purchased and financed the property and had also carried out two transactions involving other rights in the land.
The son, represented by attorney Azmi Nassar, argued that the land had been given to him as a gift. The buyer, represented by attorney Marwa Khallou Ali, maintained that he had purchased the property in good faith and for valuable consideration.
The Supreme Court rejected the father's appeal this week, explaining the distinction between ordinary transactions involving unrelated parties and transactions between family members, such as parents and children.
The ruling states that when one person finances property for another, the general presumption is that the arrangement constitutes a trust. However, in the context of parent-child relationships, courts recognize that parents commonly support their children financially. As a result, the legal presumption is reversed to a "presumption of gift," meaning the parent is presumed to have intended an outright gift without retaining ownership rights.
The ruling further explains that where no close family relationship exists to justify a presumption of a gift, the default presumption is that the person who provided the purchase money is the property's owner, while the registered owner serves only as a trustee.
The court held that a parent bears a particularly heavy burden in proving that no gift was intended, especially when the property is formally registered in the child's name. In this case, it found that the father had failed to meet that burden, noting, among other things, evidence that he had provided substantial financial support to all of his children. It therefore upheld the District Court's finding that the father had intended to transfer the land to his son as a gift.
As a result, the District Court's ruling remained in force and the father's claims against both his son and the buyer were dismissed in full. The decision was issued by Justices Alex Stein, David Mintz and Yael Willner.
Attorney Marwa Khallou AliPhoto: Rahma KhloAttorney Marwa Khallou Ali, whose practice focuses on civil and real estate law and who represented the buyer, said the ruling "reinforces the status of the land registry as a cornerstone of real estate law and the need to protect legal certainty and the security of property transactions. The court held that claims to rights not reflected in the registry, even when they arise from family relationships such as a dispute between a father and son, do not override the rights of a third party who lawfully relied on the registry. This decision gives decisive weight to stability and certainty in real estate transactions and prevents harm to public confidence in the land registry. The ruling strikes an appropriate balance between private family relationships and the need to protect legal certainty and third parties who acted in good faith."
The father's attorney criticized the decision, saying: "With all due respect, this ruling imposes a standard the public cannot reasonably be expected to meet. There cannot be one set of rules for family members and another for people who are unrelated. The father proved that he purchased 3.5 dunams (about 0.86 acres) and registered all of them in his son's name for declaratory purposes only. It was also established that he personally carried out sales involving two dunams (about 0.49 acres) of the land registered in the son's name. How, then, can the remaining 1.5 dunams be treated as a gift rather than a trust? The 1.5 dunams, with a market value of more than 2 million shekels ($589,000), were sold for just 200,000 shekels in an act of revenge against the father. The ruling clearly raises serious questions that remain unanswered even after the judgment was issued."