Court Orders Compensation for Buyers Misled on Agricultural Land Value in Pardes Hanna-Karkur

In a ruling by Judge Yehoshua Geifman at the Tel Aviv District Court, six families who purchased agricultural land in Pardes Hanna-Karkur between 2014 and 2015 were awarded 1.415 million shekels in compensation plus linkage and interest. The buyers paid approximately 735,000 shekels per dunam, nearly 6.7 times the price the marketing company itself paid, which was about 110,000 shekels per dunam. The court found that the buyers were misled by false representations that the land had approved residential building potential, while in reality, about 12 years later, the land remains designated for agricultural use.

The marketing company, A.A.A. Shai Project Management Group, was established specifically for this project and sold options on an 11,450 square meter plot at inflated prices. Sales were promoted through advertisements in the Haredi press and brochures claiming the land was "orange" (approved for residential use) under national outline plan TAMA 35, which was misleading. However, the regional planning committee had already decided in 2012, two years before the sales, that the land would remain agricultural and open rural landscape, a position supported by the local committee and confirmed by an expert appraiser who testified that the chance of rezoning was minimal to none.

The court rejected the company’s contractual exemption clauses, emphasizing the duty of good faith and the significant information asymmetry between the experienced sellers and unrepresented buyers. The ruling noted that the company and its managers, Danny Voslovers and Avraham Ben Aruya, personally participated in sales meetings and knowingly provided misleading information. Compensation was calculated based on the difference between the purchase price and the 2022 sale value of the rights to third parties, set at 300,000 shekels per dunam.

Claims against the attorney who prepared the transaction documents and held the funds in trust, Ron Elishiv, were dismissed, as was the claim against shareholder Zipora Ben Aruya. The buyers were ordered to pay 30,000 shekels in legal costs to each dismissed defendant. The court left open the question of collecting the awarded sums, noting the company reportedly ceased operations and claimed to have no remaining assets.

This case highlights ongoing issues in Israel’s agricultural land investment market, where misleading marketing about zoning changes has led to legal reforms requiring disclosure of land use status, though these regulations came into effect after these transactions.