Court Orders Homebuyers to Pay Developer $300,000 for Delivery Delay

A Kfar Saba Magistrate's Court has partially accepted a lawsuit filed by a construction company against apartment buyers in Hod Hasharon, ruling that four buyers caused a 67-month delay in property delivery due to their opposition to splitting a duplex apartment into two units. The court found that these four defendants breached their contractual obligation not to object to such changes, leading to a significant delay in handing over the property.

The dispute began in the previous decade when the company sold a seven-room duplex to a couple, agreeing to split it into two four-room units within two years of delivery. The company made necessary infrastructure adjustments. However, when the company applied for the split in April 2014, several other apartment buyers in the building objected, despite having agreed in their purchase contracts not to oppose such modifications and some even explicitly consenting to the split.

Although the local planning committee initially found no planning issues with the split in January 2016, it rejected the application due to the residents' objections. A court ruling in 2018 determined that some objectors had effectively given irrevocable consent. The developer then had to restart the licensing process, finally receiving the split permit in July 2021. The duplex apartments were delivered in October 2021, over 5.5 years past the agreed-upon date.

The construction company sought approximately NIS 2.36 million (about $640,000), claiming the neighbors' actions forced them to pay compensation to the duplex buyers for the delay and incur additional expenses like property taxes and maintenance fees. The buyers argued they were not responsible for the damages and that the company should have restored the property to its original duplex state.

Judge Ronen Peleg ruled that four of the defendants had indeed violated their contractual commitments, concluding their objections were the sole reason for the application's rejection and the subsequent delivery difficulties and costs. The judge dismissed the claim that the company should have reverted the property to a duplex, deeming it unreasonable and financially prohibitive, with an estimated cost of NIS 570,000 (about $155,000) for such work.

Ultimately, the court awarded the construction company NIS 1,143,773 (about $310,000), primarily for the compensation paid to the duplex buyers. Legal fees and court costs of NIS 197,935 (about $54,000) were also awarded, to be reduced by NIS 165,000 (about $45,000) from prior settlements with other defendants. The lawsuit against two other residents was dismissed, and the company was ordered to pay them NIS 60,000 (about $16,000) plus VAT in legal fees.