Court Orders Compensation for Misleading Sale of Agricultural Land 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. The buyers paid approximately 735,000 shekels per dunam, nearly 6.7 times the price the marketing company paid for the land, which was about 110,000 shekels per dunam. The court found that the buyers were misled to believe the land had approved residential building rights, while in reality, about 12 years later, the land remains designated for agricultural use.

The marketing company, A.A.A. Shia Project Management Group, established specifically for this project, had signed option agreements with the landowner and sold these options to buyers at inflated prices. Sales were promoted through advertisements in the Haredi press and brochures claiming the land was in an urban planning framework allowing residential construction, which was contradicted by the official regional committee's 2012 decision to keep the land zoned for agricultural and open rural landscape use.

The court rejected the company’s contractual exemption clauses, ruling that the company and its managers, Danny Voslovers and Avraham Ben Aruya, presented negligent false representations and withheld material information. The buyers, who were not represented by lawyers and came from non-real estate backgrounds, were persuaded through extensive promotional materials and meetings. The court ordered compensation based on the difference between the purchase price and the 2022 resale value, when the buyers sold their rights to third parties to mitigate losses.

Claims against the attorney who prepared the transaction documents and a shareholder in the company were dismissed, with the buyers ordered to pay their legal costs. The court emphasized the duty of good faith and disclosure in real estate transactions, especially involving unrepresented buyers. The ruling highlights ongoing issues in agricultural land investment marketing prior to the enactment of specific disclosure regulations.

Summary: Six families who bought agricultural land in Pardes Hanna-Karkur were awarded over 1.4 million shekels after the court ruled they were misled to believe the land had residential building approval, which it did not. The land remains agricultural, and the marketing company was found liable for negligent false representation and failure to disclose material facts.