Purchased a New Apartment? How to Protect Yourself Against the Contractor and Receive the Compensation You Are Entitled To

1. Signed a handover protocol stating “no claims”? You may have waived some of your rights – even if that was not your intention.
2. A delay in apartment delivery entitles you to compensation under the law – even if the contractor did not mention it and will not mention it.
3. All communication with the contractor regarding defects must be in writing. A WhatsApp message is legitimate evidence in court.
4. Warranty periods under the Sale of Apartments Law can extend up to seven years, depending on the type of defect. Do not rush to waive your rights.
5. You have three years to file a claim from the date the defect was discovered – but the longer you wait, the harder it becomes to prove.

The Apartment Has Been Delivered. What Now?

Purchasing an apartment is one of the most significant financial decisions in life. However, between the moment you sign the contract and the moment you receive the keys, there are numerous stages – and some of them can be extremely costly if you do not know how to navigate them properly.

The most common mistake is thinking that what appears “cosmetic” is negligible. A small crack in the plaster, flooring that is not quite aligned, a door that closes with difficulty – “It’s fine, it’s not serious,” most buyers think. But the legal reality says otherwise.

What Does the Law Say About Construction Defects?

The Sale of Apartments Law, 5733-1973, establishes in Section 4 specific warranty periods for each component of the apartment. These are periods during which the contractor is obligated to repair defects – even if you did not notice them on the day of delivery:

• Flooring, plaster, and yard waterproofing – three years
• Thermal insulation systems – three years
• Water, heating, and sewage piping – four years
• Building waterproofing, roofs, and exterior walls – four years
• Structural defects – seven years

The problem begins when a buyer signs a handover protocol stating “I have received the apartment and have no claims” – without having inspected it with a construction engineer. Such a protocol may serve as evidence against the buyer later and make it difficult to prove defects that already existed on the day of delivery.

Practical recommendation: Before any handover, hire professionals. They will cost a few hundred shekels and can save you tens of thousands.

Delays: Not a “Minor Deviation” but a Breach of Legal Obligation

Section 5A of the Sale of Apartments Law, added by Amendment No. 5 in 2011, requires contractors to pay compensation to a buyer who did not receive the apartment on the date specified in the contract. Important to know: Amendment No. 9 to the law (which came into effect on July 7, 2022) shortened the “grace period” granted to contractors from 60 days to only 30 days – and applies to any contract signed from that date forward.

The amount of compensation set by law equals the rental fees for a similar apartment in size and location, for each month of delay. Starting from the fifth month of delay, the compensation increases by a factor of 1.25. The law is mandatory – meaning it cannot be contracted around to the detriment of the buyer. A clause in a contract that limits compensation to an amount lower than that set by law is void on its face.

The Supreme Court addressed this issue in the leading decision CA 6605/15 Ilana Shemesh v. Space Construction and Development Ltd. (February 21, 2016). There, it was established for the first time and in a precedential manner that common clauses in sale agreements allowing the contractor to postpone the delivery date without a new, fixed, and defined date – are contrary to the Sale of Apartments Law and void.

“Force Majeure” – A Tool They Try to Exploit, and Courts Examine Under a Magnifying Glass

Many contractors draft contracts with broad force majeure clauses designed to release them from liability. Courts have interpreted such clauses narrowly. A general claim is not sufficient – the contractor must prove a direct connection between the alleged circumstances and the delay in the specific project. The High Court of Justice recently rejected the Contractors Association’s petition seeking to recognize the war as grounds for a blanket delay in apartment deliveries, ruling that the war itself does not constitute an automatic exemption from paying compensation.

In a case represented by our firm (TA 11294-10-23 Harazi v. Neot Halevi Rishon LeZion Development Ltd.), a ruling was issued in favor of an apartment buyer whose apartment was delayed in the Neot Halevi project in Rishon LeZion for a total amount of 140,000 NIS, plus 7,500 NIS for each additional month of delay until the actual delivery date – as well as additional remedies and attorney’s fees. The compensation was awarded in the Magistrate’s Court in Bat Yam. The lesson: A delay in delivery is a matter of real money – and buyers who know how to claim it, receive it.

What Do You Do When There Are Defects and No Cooperation?

The first approach to the contractor must always be in writing – not a phone call and not an undocumented meeting. The letter will include a precise description of the defects, a demand for repair within a reasonable time, and a clear warning that failure to repair will lead to legal proceedings.

If the contractor evades, ignores, or offers solutions that are not practical, several courses of action may be taken. Filing a lawsuit in court for payment of the repair cost, for an order to perform the repair in practice, and in appropriate cases also for compensation for damage to the property’s value and emotional distress. Additionally, the Sale of Apartments Law (Securing Investments of Apartment Buyers), 5735-1974, requires the contractor to secure the buyer’s funds with a bank guarantee – a guarantee that can be realized in cases of contractor failure, and a tool that many buyers forget they have at their disposal.

The Golden Rule: Document Everything

A dispute with a contractor is ultimately an evidentiary dispute. Whoever documented better will usually prevail. Keep every document, every message, every photograph with a date stamp. If you reach a stage where you feel the contractor is “stalling,” the right time to seek legal advice is before you sign any document – not after.

Do you have a question about an apartment you received? Not sure whether what you are experiencing justifies legal action? Contact us for initial information – non-binding, but sometimes it makes all the difference.

© Tidhar Tzur Law Firm | This article is for general information purposes only and does not constitute individual legal advice.