Ashdar Pays Over $500,000 in Settlement Over Contract Indexation Clause
Real estate developer Ashdar will return over 2 million shekels to apartment buyers in early 2026 as part of a class-action lawsuit settlement. The lawsuit alleged that Ashdar improperly indexed payment dates to the construction input index, using a later publication date than legally permitted, which inflated costs for buyers. The settlement mandates a refund of 51% of the overcharged amounts.
The core issue involved the timing of indexation to the construction input index, which is published mid-month. Contracts that linked payments to an index published after the payment date, rather than the one known on that day, added fractions of a percent to each shekel, accumulating to thousands of shekels on a full apartment price. This clause is common in contractor agreements, often signed by buyers without full comprehension.
Israeli Sale Law (Apartments) limits indexation: 20% of the contract price at signing is exempt, up to half of subsequent payments can be indexed, and indexation stops at the contractually agreed delivery date, even if actual delivery is delayed. Contracts deviating from these rules, such as indexing the full payment or continuing indexation beyond the contractual delivery date, are subject to buyer claims for the difference. The law also stipulates that for each month of delay past the contractual delivery date, the contractor must pay compensation and forgo indexation on the final payment.
Negotiations can lead to further concessions like full indexation exemption, index caps, or the "20/80" payment plan (20% upfront, 80% at delivery). However, the "20/80" plan has shown a downside in 2026, with buyers facing a declining market at delivery, potentially securing mortgages based on lower property values than the contract price, increasing the risk of deal cancellations.
Regarding delivery delays, a 2022 amendment (Amendment 9) to Sale Law changed compensation. After one month past the contractual delivery date, contractors must pay monthly compensation equivalent to rent for a similar apartment, escalating from 100% in the first four months to 125% for months five to ten, and 150% thereafter. This compensation is paid monthly, with exceptions for delays caused by the buyer or force majeure. Some contracts still reference older, more lenient compensation terms, and contractors often include broad force majeure clauses for war, labor shortages, or administrative delays, though courts have increasingly required a direct link between such events and project delays.
Another point of contention is the handover protocol. A January 2026 court ruling invalidated clauses requiring buyers to waive delay compensation as a condition for receiving keys. Additionally, clauses referencing contractor price lists for modifications and upgrades, like an extra electrical outlet or moving a wall, allow the contractor to set prices unilaterally. The law also specifies "defect periods" for various construction elements, with contractual shortenings being invalid. Detailed handover protocols, including photos and a list of defects, are crucial for buyers to assert their rights during the warranty period.
