Developer Ordered to Pay Over Half a Million Shekels for Delayed Penthouse

A court has ordered a real estate development company to pay NIS 443,775 in compensation to a couple for a 35-month delay in delivering a penthouse apartment in Petah Tikva. The Herzliya Magistrate's Court also awarded the buyers, Yaakov Aryeh and Chadva Shkolnik, NIS 70,000 for legal fees and expenses. The couple signed a contract in August 2021 for a penthouse in a Tama 38 project, with a promised delivery date of August 11, 2023. The developer, "Hitchadshut - Chaim Cohen 28 Petah Tikva," claimed the delay was due to the Iron Swords War, citing a contract clause that allows for delivery extensions in cases of war, mobilization, or labor shortages. Judge Eilat Haranof rejected this argument, noting that the original delivery date was set two months before the war began. She stated that if the developer had adhered to the contract, the apartment would have been delivered before the war, and neither party would have faced its consequences. The judge emphasized that such clauses apply to the construction period stipulated in the contract, not to periods when the developer is already in breach.

The court heard testimony from Nir Shar, a representative for the development company, who described a series of significant issues with subcontractors throughout 2023 and early 2024. He detailed disputes with the first contractor, who allegedly stopped working, threatened company staff, and refused to leave the site until paid. A new contractor who took over in early 2024 was reportedly removed from the site violently, causing further delays. Shar admitted to significant financial costs and mistakes in managing the contractors, stating that the company was essentially extorted. Evidence showed the company had informed residents of a year-long delay in July 2023 due to financial disputes with a contractor, predating the war. The judge found the company's claim that the war caused the delay to be unsubstantiated, lacking supporting documentation like work logs. The company also failed to present key witnesses, such as the contractors themselves, relying instead on Shar, who joined the project late and was not responsible for the technical aspects.

Furthermore, the judge ruled that other issues raised by the developer, including unforeseen engineering difficulties and contractor violence, were part of the inherent risks the company assumed. She stated that the responsibility for contractor agreements, project budgets, and construction challenges lies solely with the developer, not the buyers. The court also addressed the compensation amount, overriding the contract's provision of NIS 5,000 per month for delays. Citing the Sale Law (Apartments), which mandates higher compensation based on market rental rates, the judge accepted the buyers' appraiser's estimate of NIS 9,700 per month for the first eight months and NIS 12,125 thereafter. This resulted in a total compensation of NIS 443,775 for the 35-month delay, significantly more than the NIS 175,000 the couple would have received under the contract. The judge also ruled that the "grace period" for delays should not postpone the start of compensation payments, meaning payments are due from the original contract date, not after the grace period expires.