arises when a protected-housing facility in Israel enters bankruptcy while holding residents' substantial entry deposits (Pikadonot). The Protected Housing Institutions Law (1965) requires facilities to secure deposits via bank guarantees, insurance policies, or asset liens — but compliance varies significantly in practice. Residents without verified security documentation may lose their deposits entirely in insolvency proceedings. The Law Office of Adv. & CPA Shoshi Arbib verifies deposit security instruments before clients sign any assisted-living agreement.
What Is the Risk of Losing a Deposit in Assisted Living?
Deposits (Pikadonot) paid to assisted living facilities in Israel can range from several hundred thousand to several million shekels. These are not held in escrow by default — they often become part of the facility's operating capital. If the facility goes bankrupt, the deposit may be lost or significantly reduced in the insolvency proceedings.
Legal Protections That Exist
The Diur Mugan regulations require facilities to secure deposits through one of several approved mechanisms: a bank guarantee, insurance, or registration of a lien on the facility's assets. In practice, compliance varies. Prospective residents should demand to see the guarantee document before paying any deposit.
What to Check Before Paying
- Request the deposit security instrument — bank guarantee letter or insurance policy.
- Verify the guarantee is for the full deposit amount and covers the duration of residence.
- Check the financial standing of the facility — recent financial statements if available.
- Ask whether the facility is part of a larger group with stronger backing.
Is my assisted living deposit protected if the facility goes bankrupt in Israel?
It depends on the security provided. The law requires facilities to back deposits with a bank guarantee, insurance policy, or registered lien. If a valid guarantee exists, you can claim against the guarantor independently of the insolvency proceedings. If no valid guarantee was given — or it has lapsed — recovery in an insolvency will be partial at best. Always verify the guarantee before paying.
What is legal protections that exist?
The Diur Mugan regulations require facilities to secure deposits through one of several approved mechanisms: a bank guarantee, insurance, or registration of a lien on the facility's assets. In practice, compliance varies. Prospective residents should demand to see the guarantee document before paying any deposit.
Official References: National Insurance Institute of Israel · Israel Ministry of Justice · Israel Ministry of Justice — Lasting POA · Israeli Courts Administration · Israel Land Authority
Steps to Reviewing an Assisted-Living Contract
- Obtain the full contract — Request the complete residency agreement, including all annexes, internal rules, and service price lists, before signing.
- Examine deposit provisions — Verify that the deposit is secured under the Supervised Housing Law, understand repayment conditions, and check protections against insolvency.
- Understand cancellation and exit terms — Clarify cancellation fees, notice periods, and how partial refunds are calculated.
- Legal review before signing — Have an elder-law attorney examine the contract for problematic clauses and negotiate amendments in the resident's favour.
Shoshi Arbib Law Office — Attorney | CPA | Mediator, Netanya, Israel.
