Court Orders Landlord to Pay Quarter Million Shekels to Butcher Shop Misled on Food Sales Ban

A butcher shop company that rented a store in Rishon Lezion to operate a butcher shop was awarded compensation of approximately 250,000 shekels after discovering a hidden clause prohibiting food sales on the premises. The Rishon Lezion Magistrate's Court ruled that the landlord, a real estate company, breached its duty to disclose this critical restriction. The lease agreement, signed in 2020 for four years with an option to extend, was for a monthly rent of 26,000 shekels plus VAT. The building permit included a tiny note stating the space was for a "non-food store," which the judge said was effectively concealed due to its minuscule font size.

In June 2021, the tenant discovered the restriction and canceled the lease, requesting a refund of paid checks. When the landlord did not respond, the tenant sued for one million shekels, covering rent paid and additional costs such as brokerage fees and municipal taxes. The landlord counterclaimed for about 390,000 shekels, alleging lease violations and damages caused by the tenant. However, the court rejected the landlord's claim and partially accepted the tenant's.

Judge Rafi Aranya emphasized that the landlord knew about the food sales ban but failed to disclose it, constituting bad faith and deception under contract law. The court noted the landlord was an experienced real estate company and that the tiny print on the building permit did not fulfill the disclosure obligation. The judge ruled the tenant was entitled to unilaterally cancel the lease and ordered the landlord to refund 198,353 shekels plus 45,000 shekels in attorney fees and court costs.

The case highlights the importance of full disclosure of material lease restrictions and the legal consequences of concealing such information from tenants.