The Deposit Risk Problem
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.
