Developer Must Pay NIS 444,000 for Undelivered Penthouse

A court has ordered a real estate developer to pay NIS 443,775 in compensation to a couple for a penthouse that was significantly delayed. The penthouse, part of a Tama 38 urban renewal project in Petah Tikva, was supposed to be delivered by August 11, 2023, but remains undelivered over three years later. The developer, "Tichnun - Chaim Cohen 28 Petah Tikva," claimed force majeure, citing the war and a subsequent shortage of construction workers as reasons for the delay.

However, the Herzliya Magistrate's Court rejected the developer's central argument, noting that the delivery date was set two months before the outbreak of the "Swords of Iron" war. Judge Eilat Harnof ruled that if the developer had adhered to the original schedule, the apartment would have been delivered before the war began, thus negating the force majeure claim. The court emphasized that such clauses apply to the construction period, not to delays caused by the developer's own breaches.

Further undermining the developer's defense, a company representative, Nir Shar, admitted in court that the delays were due to a series of issues with subcontractors. He described significant problems with the first contractor throughout 2023, including the contractor unilaterally ceasing work and demanding payment to leave the site. The situation worsened in early 2024 when a second contractor allegedly extorted the company before disappearing from the site. Shar conceded, "It's our mistake, because it cost us quite a bit of money."

The court also dismissed claims of unforeseen engineering difficulties and violence from contractors, stating these were inherent risks the developer assumed. The judge ruled that the developer is responsible for contractor relations, project budgets, and construction issues, not the buyers. The compensation awarded, based on market rent rates rather than the contractually agreed amount, reflects 35 months of delay, significantly exceeding the NIS 5,000 per month stipulated in the contract. The developer was also ordered to pay NIS 70,000 in legal fees and expenses.