Court Rules Contract Valid Despite Buyer's Four-Month Payment Delay

A district court in Be'er Sheva has ruled that a real estate contract remains valid despite buyers delaying payment for an apartment by approximately four months. The buyers, Rami Rahamim Cohen and Aviad Cohen, purchased a garden apartment in Sderot for 1.4 million shekels. While the contract stipulated an initial payment of 140,000 shekels upon signing and the remaining 1.26 million shekels within three months, the first payment was made 1.5 months late, and the balance was transferred about four months after the due date.

The contracting company, S.A.I. - Or Company for Building Trade, Development and Investments, declared the deal canceled. However, Judge Gala Levin ordered the company to transfer the apartment to the buyers and register it in their names, also obligating the company to pay 25,000 shekels in legal costs. The buyers, in turn, must pay the company 118,706 shekels for the delay, plus linkage and interest.

Conflicting accounts emerged regarding a meeting between the parties at a gas station to discuss canceling the deal. The company's manager, Shlomo Buskila, claimed the buyers were in financial distress and he agreed to waive the agreed-upon compensation, with the deal to be canceled via signed documents. The buyers, however, stated they only agreed to consider the idea and requested a written document, asserting that Buskila later insisted on the agreed-upon compensation. They also suggested the company initiated the cancellation idea, possibly because the manager wanted the apartment for his daughter.

Judge Levin found Buskila's testimony uncorroborated and noted the company's actions after the meeting did not align with a cancellation agreement. The court highlighted that the company did not return the initial payment, inform the supervising bank, or report to tax authorities, and even provided a commitment to the buyers' mortgage bank. The judge stated it was difficult to understand how a significant matter like contract cancellation lacked written documentation.

The court also addressed the company's claim of a fundamental breach due to the payment delay. While the contract defined payment terms as fundamental, it also outlined a cancellation procedure requiring written notice and a ten-day period for the buyer to rectify the payment with interest. The company's first cancellation notice was sent via email after the funds had already arrived, and a formal letter from its lawyer arrived months later. The judge ruled that both notices were sent after the breach was rectified, thus invalidating the cancellation. She added that the injured party can waive a breach, as the company appeared to have done regarding both payments.

In a counterclaim, the company's demands for compensation for a missed deal with another buyer and for apartment upgrades were dismissed due to a lack of evidence. The court also ruled the company was responsible for losses on frozen funds, as they were available to the company until it chose to halt them. The judge rejected the company's claim for agreed-upon compensation, stating it would constitute double compensation alongside the delay interest.