Mr Kirsh's burial at the Muslim Cemetery was refused on the basis of a 1935 fatwa, that said "anyone who sells a home or land to Jews will not receive a Muslim burial".
But Aryeh Stern, the Ashkenazi chief rabbi in the city, declared Mr Kirsh could be buried in the cemetery as a "righteous gentile", Yvnet reported.
Rabbi Stern decreed Mr Kirsh could be buried in a section of the Jewish cemetery at Har HaMenuchot, for people with no religion.
He said: "Since the Muslims will not bury him, we must correct the distortion of justice, that results in unjust humiliation of a man whose only sin was being prepared to sell land to Jews.
“It is incumbent on us to honour a righteous gentile, and in this case a person who showed good will and was willing to take risks for the Jewish settlement.”
