The High Court of Justice pressed Keren Kayemeth LeIsrael-Jewish National Fund on Wednesday to resume negotiations over the future of hundreds of homes on former Greek Orthodox Church land in Jerusalem, questioning why talks had stalled and why the Israel Land Authority considered itself an outside party.
“We did not ask why it has not been concluded, but why negotiations are not taking place,” Justice Dafna Barak-Erez told KKL’s lawyer, after he acknowledged that negotiations had not taken place since July 2025.
The hearing concerned a petition seeking to require KKL to extend decades-old leases covering land in Talbiyeh, Nayot and parts of Rehavia. The current lease periods end in the early 2050s, but residents argue that uncertainty over what follows is already damaging the value of their homes and their ability to improve them.
The panel - Barak-Erez and Justices Ofer Grosskopf and Yechiel Kasher - did not decide whether KKL must renew the leases. Instead, Barak-Erez said the case would remain open, and the court expected an update on concrete progress in negotiations. A formal decision would follow.
At the center of the dispute is the distinction between owning an apartment and owning the land beneath it.
Decades-old Greek Orthodox Church land leases complicate Jerusalem property rights
Under three agreements signed in 1951 and 1952, the Greek Orthodox Patriarchate leased extensive Jerusalem land to KKL for 99 years. Residents, businesses and institutions then acquired leases through KKL, administered on its behalf by the Israel Land Authority. Their rights therefore depend on KKL’s leases with the landowner. Despite the involvement of KKL and the state authority, the land itself is privately owned.
The church transferred rights in the land to private investment partnerships in transactions in 2011 and 2016. A group led by US real estate developer Gary Barnett, founder of Extell, subsequently agreed to acquire the rights through Karkaot Yerushalayim 2022 Ltd. in a NIS 750 million deal signed in 2023. The company says the purchase was completed in early 2024.
The dispute covers more than 500 dunams and extends beyond residential buildings to hotels, public institutions and open spaces.
Filed in July 2025 by 204 petitioners, including residents, hotel interests and an educational institution, the petition asks the court to require KKL to use its renewal rights and prevent it from surrendering them in an agreement with the landowner. Alternatively, the petitioners seek an unequivocal commitment that the leases will be renewed.
They argue that KKL acquired and administered the leases as part of a public undertaking to develop Jerusalem, and cannot now leave those who relied on that arrangement to face the approaching expiry alone.
They point to past assurances, including a 2017 letter from then-KKL chairman Daniel Atar promising that KKL and the government would continue working toward a resolution while protecting residents’ rights and interests.
An appraisal submitted with the petition describes substantial price differences between homes on leased land and those on privately owned land, and warns that the shortening lease periods could increasingly make mortgages harder to obtain and discourage long-term investment.
At Wednesday’s hearing, the petitioners’ lawyer, Ilan Sofer, said residents were already facing difficulties adding protected rooms and elevators.
“We have been in this situation for 15 years,” he said.
Jerusalem residents push KKL to renew land leases, protect property rights
The petitioners want KKL to use the renewal clauses in its original agreements with the church to secure residents’ future on the land. They say they are willing to contribute toward the cost, but argue that KKL should not surrender those rights in a deal with the current landowner.
They draw support from KKL’s own reading of the agreements: that it holds unusually strong rights and can renew the leases repeatedly, subject to paying rent.
KKL argues that pursuing that interpretation in court could take years, with no certainty over the outcome or cost. It says negotiations could produce a better solution, potentially allowing residents to buy the land rights attached to their apartments rather than continue leasing through KKL.
KKL also disputes that it has a legal duty to extend residents’ leases beyond their current terms, although it says it is working toward a solution as part of its public mission.
The original agreements provide a process for setting the length and cost of an extension if the sides cannot agree. But the scope of KKL’s renewal rights remains disputed.
The church, which signed those agreements but no longer owns the land, has offered a narrower interpretation than KKL’s. In an October 5 submission, it acknowledged the renewal options and said it had understood that KKL intended to use them. Two days later, it clarified that this did not mean it agreed that KKL could renew the leases repeatedly or that its rights were effectively equivalent to ownership.
The judges questioned whether requiring KKL to pursue a legal battle would necessarily help residents. Litigation could itself prolong the uncertainty, they warned, without guaranteeing a better result than negotiations.
But they also pressed KKL to explain why those negotiations were not taking place.
High Court questions KKL over stalled Jerusalem land lease negotiations
KKL lawyer Alon Gellert described intensive talks in July 2025. Asked by Grosskopf whether there had been no negotiations since then, he confirmed that there had not, citing a subsequent change in KKL’s leadership and work on its response to the petition.
Barak-Erez said the new leadership could be expected to have familiarized itself with the issue after several months. When Gellert stressed that difficult negotiations could not simply give the landowner everything it wanted, she distinguished between failing to reach agreement and failing to negotiate.
“We will of course continue negotiations,” Gellert subsequently told the court, saying there was an existing basis from which to resume.
The Israel Land Authority faced separate questions over its role. Its representative said KKL held the principal leases and the authority assisted in administering them, describing the ILA as outside the negotiations.
“How can you be an outside party?” Grosskopf asked.
Barak-Erez pointed to the state’s involvement in the original arrangement.
“There is an expectation that you will not be indifferent to what is happening there,” she said.
The state’s representative said the government was following the broader church-land issue and noted legislative proposals that had not advanced. Barak-Erez said unsuccessful legislative efforts did not relieve the state of its ordinary administrative responsibilities.
The company’s lawyer, Zvi Agmon, said it was ready to negotiate immediately and that earlier discussions had come close to agreement.
“Our door is open to negotiations,” he said.
The company says residents’ existing leases remain valid and their expiry dates were specified in the contracts. It argues that its offers to sell residents the land rights attached to their apartments, including through deals involving payment and redevelopment, could provide lasting certainty.
The leaseholders are not united over the route forward. A lawyer representing another group told the court that his clients had negotiated directly with Extell and already had an arrangement, criticizing KKL as an obstacle to completing it.
The Jerusalem Municipality also has an interest through public properties and spaces on the land, but argues that it is not responsible for renewing KKL’s leases.
KKL and the ILA also argue that disputes over the lease contracts belong in a civil court. The petitioners say the High Court should intervene because public bodies bear responsibility for resolving the problem. The judges left that question open.
Jerusalem leaseholders promised consultation, right to challenge future agreements
An earlier request to freeze transactions was rejected in September 2025, with the court relying on KKL’s undertaking to consult affected leaseholders before signing an agreement concerning their rights. At Wednesday’s hearing, the company also said any arrangement would be made public, and those affected would have an opportunity to challenge it.
For now, the court is looking for tangible progress in talks while preserving the parties’ legal arguments. Sofer told the judges the petitioners would assess any agreement on its merits.
“If there is an arrangement, we will either petition against it or welcome it,” he said. If there is none, they want the petition decided.