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Anyone who expects that apartment prices will fall, will probably be deceived.
There are many reasons for this, such as a consistent increase in the population, the factors that depend on the price level, apartment owners who are obligated to mortgages, entrepreneurs who purchased land at prices that oblige them to sell apartments at a minimal profit, and more.
In addition, the current stagnation in real estate transactions and new construction starts, as shown by the LMS data published this week, means that in the foreseeable future there will likely be a shortage of apartments.
This is supposed to be the beautiful hour of urban renewal, in which the developer does not have to buy land on the one hand, and the tenants can significantly upgrade their quality of life on the other hand.
But unfortunately, despite the great potential, only a small part of the buildings that have the potential for urban renewal, promote it.
The signing contractors, the executors, spread false promises
One of the main failures that cause this is that the high price level has led apartment owners to the mistaken idea that they deserve more, which causes suspicion between the apartment owners themselves and the developers.
As property prices on the market have risen, tenants think they can maximize the returns.
Since the field of urban renewal is currently the most active in the field of entrepreneurship, hundreds of small entrepreneurs entered the field.
Thus, tenants find themselves signing to several companies at the same time, some of them are actually signature contractors (sealers) who make promises without checking economic and planning feasibility, and sometimes even rush to write warning notes on the apartments that signed them.
Those organizers, promoters, many who are active in the market, trade in these buildings and make their tenants believe that they can get much more than what a developer offers them.
Organizers usually sell the project to whoever they want, but they are not actual entrepreneurs and are not professionals.
The Law of Organizers in Urban Renewal
In 2017, the Law of the Organizers in Urban Renewal was enacted, which regulates the activities of the disputants and is intended to protect the tenants, this in light of the phenomenon of signature contractors in the industry.
5 years have passed since then - but the phenomenon still exists.
Apparently, according to the law there shouldn't be a problem with those suppliers because the agreements are limited in time.
So then, why doesn't the organizer's law work?
After all, the law has timetables and stipulations.
According to a law passed in 2021, most apartment owners in a building, even if they did not sign, may cancel a building eviction deal, as long as within 5 years from the date of the first tenant's signature, the developer has not contracted with 2/3 of the apartment owners in the building.
When it comes to TMA 38, if within 3 years from the date of the first tenant's signature, the developer has not entered into an agreement with 2/3 (reinforcement) or 80% (demolition) of the apartment owners in the building.
For example, the default for the validity of the agreement is 6 months starting from the determining date, when the organization agreement was signed with the first tenant.
An extension of the validity of the agreement beyond 6 months will only be allowed if the organizer has acted according to specific requirements - signing additional tenants on the organization agreement, or signing an eviction-construction agreement/TAMA 38 with the developer/contractor. Another extension will be accepted on the condition of submitting an application For the granting of a building permit for the implementation of the project by the planning authorities.
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The phenomenon continues to this day - and stalls projects
We still encounter in almost every potential complex signature contractors who continue to operate in disregard of the Organizers' Law, also known as the "Machirim Law".
The organizers ignore the law, and what happens is that we often come across unprofessional organizers who make false promises that there is nothing between them and the reality, and when they get to the Khels they find out that there is no financial feasibility.
In such a situation it often happens that things get complicated, for example a complex where we operate in Haifa.
Signature contractors came in and instead of organizing representation for the tenants and choosing a lawyer for the tenants, the tenants signed a non-shop and issued warning notes to the apartments. We organized legal representation, the tenants chose legal representation, and currently the lawyers in the complex are working to cancel the warning notes that were registered in violation of the law. Because of this situation, The implementation process of the project continues beyond what is desired.
In summary, it is recommended that tenants in potential urban renewal complexes follow a number of rules of thumb:
Choose only well-known companies in the field of urban renewal that can present a resume of successful projects.
Choose a lawyer who will represent the tenants in front of the developers and in front of the signatories.
Hold a conference to which all the tenants were invited, in which: maintain transparency among all the tenants, choose a legal representation that will choose a lawyer to represent the tenants and stand up to the developer
Do not sign to any organizer independently.
Yishai Roth, the writer of the column, is the VP of Business Development of the Shovel Group, which deals with entrepreneurship and construction
Yishai Roth, VP of Business Development of the Shovel Group, which deals with entrepreneurship and construction (Photo: Public Relations)
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