Contractor Must Pay Buyer NIS 134,000 for 21-Month Apartment Delay

The Tel Aviv District Court has rejected an appeal by the development company Ovi Hakora Megurim, upholding a lower court's decision that the company must pay a buyer NIS 134,188 in compensation for a 21-month delay in delivering an apartment. The apartment, part of a Tama 38 urban renewal project in Tel Aviv, was originally slated for delivery in March 2019 but was only handed over in January 2021, after the building received its occupancy permit (Form 4) in December 2020.

The buyer, who does not speak Hebrew and was represented by her son, had sued for NIS 174,335, including NIS 157,500 for the delay, NIS 15,000 for distress, and NIS 2,335 for notary expenses. The developer argued that the delay was caused by the buyer's requests for modifications and that the contract allowed for extensions. However, the court found that the building lacked the required occupancy permit until December 2020, and the contract stipulated that delivery could only occur after its issuance.

Deputy President Avigail Cohen ruled that the lower court's decision was well-reasoned and based on factual findings and credibility assessments, which are rarely overturned on appeal. She dismissed the developer's claims regarding the buyer's alleged non-payment and the nature of the occupancy permit, stating that the permit was a material requirement for delivery and payment according to the contract.

The court also rejected the developer's arguments about the contract's compensation clause, which offered NIS 900 per room per month for delays. This clause was deemed invalid as it was less favorable to the buyer than the compensation mandated by the Sale (Apartments) Law. An expert valuation estimated the monthly rent for a similar apartment at NIS 4,750, highlighting the inadequacy of the contractual compensation.

In addition to the original compensation, the developer was ordered to pay NIS 15,000 in legal costs and attorney fees. The court also noted that some of the developer's arguments, such as the son acting as a representative, were not raised in the initial defense and constituted an improper expansion of the case. The appeal was ultimately dismissed, with the deposited guarantee to be transferred to the buyer.