Mandelblit: Price Resident Program Lotteries Appear to Be Illegal

Attorney General Avichai Mandelblit.
(Yonatan Sindel/Flash90)

A year after attorneys for the Finance Ministry became concerned that the national lottery for Price Resident homes faced legal troubles because the Ministry did not have a permit to run a lottery, State Attorney Avichai Mandelblit has come to the same conclusion. Mandelblit ruled on the matter after being approached by Asi Messing, the legal advisor of the Finance Ministry, who was seeking to clarify the previous legal opinion rendered by the Housing Ministry attorneys.

The decision by Mandelblit is likely to help in a number of lawsuits that have already been brought by Israelis who did not win the opportunity to buy a lower-cost apartment in a Price Resident lottery – because the Finance Ministry never received a permit from the state’s Lottery Authority to conduct a lottery.

The Price Resident program provides contractors and developers with lower-cost, or even free parcels of land where they can build projects. In return, they commit to selling a percentage of the housing units in their projects at a discounted price, which can be bought by eligible families – usually young couples or families with children who do not own an apartment. The discounts for Price Resident apartments can amount to 30% or even more off the market price of an apartment.

So far, five such lotteries have been held, with about 50,000 out of 130,000 applicants to the program winning the right to buy an apartment at a price lower than the going market rate. A report in The Marker said that the Ministry is now considering what to do in the event that they are faced with lawsuits from some of the 80,000 applicants who were told they did not win the chance to buy a discounted home. Messing was seeking Mandelblit’s legal opinion in an effort to build a defense for the Ministry.

Messing was of the opinion that the lotteries were legal, as the “spirit” of the law against running private lotteries was to prevent criminal activity; lawmakers certainly did not intend to exclude lotteries for the purpose of helping young families buy affordable apartments. However, attorneys in the Finance Ministry felt that more clarity was needed, thus the request from Mandelblit for an opinion. According to attorneys, the law clearly states that any lottery that provides as a prize, money, or something worth money – like a discount on an apartment – requires a license from the Lottery Authority.

While the Price Resident program has had its successes, it has also faced criticism. Many of the lotteries in outlying towns are under-subscribed and the state has a hard time selling the apartments, while there is great demand for apartments in the center of the country. In addition, the program has been criticized by chareidi MKs for failing to provide sufficient units in chareidi towns, with most of the projects built in mixed or secular towns.