Complex deals
TAMA 38 and Pinui-Binui: What to Check Before You Sign
Has a developer approached your building with an offer to strengthen it, or to demolish and rebuild it? Here, in plain language: the difference between the types of project, how many neighbours must sign, what the contract with the developer must include, and a calculator that checks whether the offer pays off for you.
What is the difference between TAMA 38/1, TAMA 38/2, the Shaked alternative and pinui-binui?
The principle is similar in all tracks: the apartment owners give the developer the additional building rights, and in return receive an upgraded or new apartment without paying. The difference is in what happens to the building, the majority required and the forum that decides disputes.
| Track | What happens to the building | Majority required | Who decides when someone refuses |
|---|---|---|---|
| TAMA 38/1 (strengthening and additions) | The building is strengthened and apartments are added on the roof or the ground floor. Residents stay at home. | Two thirds of the apartments and two thirds of the common property | The Superintendent of Land Registration |
| TAMA 38/2 (demolition and reconstruction) | The building is demolished and rebuilt. Residents move to rented accommodation and receive a new apartment. | Two thirds of the apartments and two thirds of the common property, in a building of at least 4 apartments | The Superintendent of Land Registration |
| Shaked alternative (the route that replaced TAMA 38) | The municipality approves its own plan to strengthen the building or to demolish and rebuild it, sometimes allowing part of the building rights to move to another plot. | As in TAMA 38, according to the track | The Superintendent of Land Registration |
| Pinui-binui | A compound of several buildings is demolished under a detailed plan and rebuilt at higher density. | Two thirds of all the apartments in the project, and in each building three fifths of the apartments and more than half of the common property | The court |
The majority for TAMA and the Shaked alternative is set in sections 5 and 5A of the Strengthening Law. For pinui-binui it is set in the definition of "special majority" in section 1 of the Pinui-Binui Law.
Does TAMA 38 still exist in 2026?
Not as a route to a new permit. According to the Planning Administration, TAMA 38 expired in most of the country on 1.10.2023. In municipalities that submitted a replacement plan it was extended until 18.5.2026 at the latest, or until the replacement plan was approved. Projects that received a permit continue under it.
It has been replaced by two routes. The Shaked alternative: the municipality's local planning committee approves its own plan to strengthen an old building or to demolish and rebuild it, and the developer receives additional building rights in return, up to four times the existing built area. The name comes from the Interior Minister who promoted the amendment in 2022 (Amendment 139 to the Planning and Building Law). A municipal plan prepared under TAMA 38 itself (section 23 of TAMA 38). For apartment owners the rules have hardly changed: the Strengthening Law applies to plans under Amendment 139 as well, and so do the tax exemptions. Check with the local committee which plan actually applies to your building.
How many owners must sign?
A developer needs a majority in order to go to a forum against owners who do not sign. In TAMA and the Shaked alternative: the owners of two thirds of the apartments, to whose apartments two thirds of the common property is attached. In pinui-binui: two thirds of all the apartments in the project, and in each building at least three fifths of the apartments and more than half of the common property. In a building of 6 or more apartments, an owner of more than 30% of the apartments is counted in a limited way (section 4 of the Pinui-Binui Law).
Even with a majority, an owner's refusal is not always unreasonable. The law protects, for example, owners who were not offered alternative accommodation or adequate security, and elderly people and people with disabilities. If you have been sued as a non-consenting owner, see the page on representing a non-consenting owner on the office's main site.
Calculator: does the developer's offer pay off for you?
The calculator compares the value of your apartment today with its value after the project, in today's terms. It discounts the future value by the length of the project, adds or deducts the rent gap and the increase in maintenance fees, and gives an initial indication of whether the replacement apartment falls within the betterment tax exemption.
Disclaimer: the calculator result is an estimate only, based on the data entered, and is not legal advice, tax advice or an assessment. Do not make a decision on the basis of the result alone. Use of the calculator is at the user's responsibility and subject to the terms of use and disclaimer.
What must the agreement with the developer include?
A good agreement protects the owners even when something goes wrong. These are the issues to check in every agreement:
- The consideration for each apartment: area, balcony, parking, storage, floor and aspect, and a binding technical specification.
- Security: a bank guarantee securing delivery of the apartment (for example in the Sale Law form), a guarantee for rent and for restoring the property, insurance, and bank financing of the project.
- Timetable: deadlines for signatures, for filing a permit application or plan, for starting the works and for delivery, and agreed compensation for delay.
- Alternative accommodation: the amount of rent during construction, removals, and what happens if construction takes longer.
- Exit: what happens if the developer does not obtain a majority, does not obtain a permit or runs into difficulties. The law allows a majority of the owners to decide to cancel where the developer has not met the statutory deadlines (section 5C of the Strengthening Law, section 1D of the Pinui-Binui Law).
- Equality: the same consideration principles for all owners, and a transparent mechanism for allocating the apartments.
- Taxes and costs: who bears betterment tax, purchase tax, VAT and legal fees.
Before the first deal the developer must convene the owners and give all of them a summary of offer document, at least two weeks before signing (section 1A of the Pinui-Binui Law, which also applies to TAMA under section 5B of the Strengthening Law).
Who is the owners' lawyer, and who pays?
In most projects the developer pays the fees of the lawyer representing the owners. This is accepted practice, but it does not make the lawyer the developer's representative. The law requires anyone acting for the developer, or whose fee depends on the deal going ahead, to disclose this in the very first approach. They must also report any non-trivial change in the consideration of one owner compared with the others. A breach of these duties allows an owner to withdraw consent, even after signing (section 5E of the Strengthening Law).
Make sure the lawyer was chosen by the owners, has no connection with the developer, and is available to every owner and not only to the house committee.
Is betterment tax payable on the replacement apartment?
Usually not, if the conditions are met. In strengthening and additions, the sale of the building rights is exempt where the consideration is given as construction services and the building is actually strengthened (section 49LG of the Real Estate Taxation Law). In demolition and reconstruction, the exemption applies to one replacement apartment, and in a preferred area up to two, where the area is no larger than the old apartment plus 25 sqm, or the value does not exceed the statutory ceiling (section 49LG1, temporary provision until 31.12.2033). In pinui-binui, the exemption applies to a replacement apartment up to a value ceiling: the highest of 150% of the value of the apartment sold, the value of a 120 sqm apartment in the compound, or an apartment of 150% of the old area up to 200 sqm (section 49KB).
Cash consideration, a second apartment or area beyond the conditions may be taxable. See also the betterment tax calculator.
Buying a resale apartment in a building with a signed TAMA agreement?
Anyone buying an apartment in such a building also buys the seller's obligation towards the developer. Before signing, check the land registry extract for a caution note in favour of the developer, read the agreement with the developer and the power of attorney, and find out what stage the project is at and which apartment will be received. The price should reflect both the future value and the risk and time until then. The purchase agreement should state who steps into the seller's shoes towards the developer. More on the checks: buying a resale apartment.
What happens if a neighbour does not sign?
If there is a majority, the developer and the owners who signed can sue the owner who did not. In TAMA and the Shaked alternative the claim is filed with the Superintendent of Land Registration, and in pinui-binui with the court. The forum examines whether the refusal is unreasonable. It can approve the project and appoint someone to sign in place of the refusing owner, and in pinui-binui also hold the owner liable for the damage. Before such proceedings it is worth trying to talk: a change in the consideration or the security often resolves the dispute.
An objecting owner can also go to court and ask for an injunction to hold up the project. This can stop a whole building for a long time, but anyone seeking such an order undertakes to compensate for the damage if the proceedings fail.
More on this topic: Complex transactions | Combination deal | Combination vs cash calculator | Buying a resale apartment | All calculators | Representing a non-consenting owner
Questions and answers
Is TAMA 38 still in force?
Not as a route to a new permit. It expired in most of the country on 1.10.2023, and in municipalities that received an extension on 18.5.2026 at the latest. New projects proceed under the Shaked alternative (Amendment 139 to the Planning and Building Law) or under municipal plans, and the Strengthening Law and the tax exemptions apply to them too.
How many owners must sign for TAMA 38?
To apply to the Superintendent of Land Registration against owners who have not signed, the owners of two thirds of the apartments are required, to whose apartments two thirds of the common property is attached (sections 5 and 5A of the Strengthening Law).
What is the difference between TAMA 38/2 and pinui-binui?
In TAMA 38/2 a single building is demolished and rebuilt under the strengthening plan, and disputes are heard by the Superintendent of Land Registration. In pinui-binui a compound of several buildings is demolished under a detailed plan, a majority is also required in each building, and disputes are heard by the court.
Do I need my own lawyer if there is a lawyer for all the owners?
It is not mandatory, but make sure the owners' lawyer is independent of the developer. An owner with special circumstances, such as age, disability, a mortgage or an apartment with an addition, can use a lawyer of their own to review the agreement against their situation.
Not sure the deal is safe? Let's start with a conversation
In an initial conversation we will go over the property, the other party and the payment schedule, and tell you what needs to be checked before you sign.