Apartment Buyers Sue Avnei Derech for $3.8 Million Over 4-Year Delays

Buyers of 32 apartments in a Jerusalem construction project are suing the real estate company Avnei Derech for 14.7 million shekels (approximately $3.8 million) in compensation due to delays of over four years in receiving their homes. The plaintiffs claim that the extended delays have forced them to pay rent concurrently with their mortgage payments, leading some to postpone loan repayments and incur additional interest. The lawsuit, filed in the Tel Aviv District Court, also alleges that Avnei Derech has failed to compensate buyers for rental costs incurred beyond the original contract terms. Furthermore, the company reportedly intends to charge buyers for indexation differences on their payments, even for the period of delay after the originally scheduled delivery date.

Avnei Derech, controlled by Yair Cohen, became involved in the Tama 38 project in Jerusalem's Kiryat Hayovel neighborhood after the original developer, Tzabarim, encountered financial difficulties and entered insolvency proceedings in 2023. Avnei Derech became a partner in the project in October 2020 and assumed full responsibility in January 2024. The buyers contend that Avnei Derech is responsible for Tzabarim's prior commitments, citing the company's own announcements about the project's transfer. They reject claims of force majeure, asserting that delays began before the war and were exacerbated by insufficient staffing.

The buyers' compensation claim, totaling approximately 13.76 million shekels, is based on estimated rental costs and the duration of the delays. The earliest buyers, who signed in 2016, were promised delivery in January 2022, while the latest, who signed in 2022, were promised delivery in early 2025. The lawsuit references Israel's Sales Law (Apartments), which mandates compensation for delays exceeding 60 days, with penalties escalating based on the rental value and length of the delay. The buyers are also seeking 960,000 shekels for emotional distress and expenses.

Avnei Derech responded that the lawsuit was filed by buyers who originally purchased from Tzabarim, the initial developer that faced insolvency. The company stated it entered the project five years ago to advance it after a prolonged standstill. Following the original developer's collapse, Avnei Derech assumed full responsibility to prevent further delays and ensure construction continuity. The company disputes the four-year delay claim, attributing delays to pre-existing issues, the war, and security conditions, while asserting that the project is proceeding and apartments are expected to be delivered within months. Avnei Derech stated it had not yet received the lawsuit and would respond accordingly, emphasizing that the project is being built in compliance with permits and the law.