House Rules Israel today

Court rulings on real estate in the past year are shaping the rules of the game in the industry

• Important decisions that determine the legal boundaries of the decree

  Photography: 

  envato elements

Produced by the Department of Special Supplements

Every year the courts make hundreds of decisions in the real estate field, whether they are decisions of appeals committees, district courts and the Supreme Court.

Some of these decisions are of great importance, as they teach us the mindset in court on issues concerning property and apartment owners, renovators, service buyers, developers and anyone involved in the industry.

With the help of experts we have compiled the interesting judgments from the past year. 

Changes and delays

Does the postponement of the date of delivery of an apartment for a period of several weeks due to changes, constitute an exemption condition that is contrary to the provisions of the Sale Law, or is it a contractual agreement on a new delivery date?

Buyers of apartments have signed a contract with a contracting company in which it was determined that the delivery of the apartment will be made one year after the date of signing the agreement.

About a month later and following the buyer's request to make a number of changes and adjustments to the apartment, the parties made an agreement to make changes, in which it was agreed that ordering the changes would result in a delay in delivery of the apartment for up to 13 weeks.

The apartment was delivered more than 13 weeks late for various reasons.

The company paid for the unanimous delay, but the buyers also demanded compensation for the period of the changes, claiming that the changes ordered did not justify postponing the date of delivery of the apartment by so many weeks, and therefore should be seen as a condition that contradicts the conditions in the Sale Law.

The district court held that the case law established in the Supreme Court was intended to ensure that a seller would not make improper use of the tenant change mechanism for the purpose of postponing the delivery date of the apartment, but this does not prevent the parties to agreeing on a new contractual delivery date.

It was determined that in this case the agreement made by the parties should not be seen as an agreement that harms the buyer in a way that does not comply with the provisions of the Sale Law, but a legitimate contractual agreement of the parties to set a new delivery date.

Attorney Liron Roth, a partner at Gindi Caspi & Co., notes that apartment buyers need to understand that if they sign a separate agreement with the contractor and agree to the postponement, they will not be able to receive compensation for the delay afterwards.

However, setting an arbitrarily or completely postponed date for any requested change may, in appropriate circumstances, amount to a violation of the provisions of the Sale Law.

Improvement in evacuation-construction

How do you calculate an improvement in an evacuation-construction project

It was determined that the improvement in the eviction-construction project should be calculated in accordance with the economic benefit derived from the tenant only, he is the owner at the time of approval of the plan, and not from the point of view or profitability of the project developer.

Thus, where a multiplier of 3 new dwellings is determined for each dwelling vacated in an eviction-construction complex, the additional building rights received by the tenant sold to the developer should be ignored, as these additional rights are intended to finance the construction services and consideration received by the tenant. Execution only, and not as a tax assessee.

In the end, the tenant (owner) must be assessed only on the value of the new right he received in exchange for the eviction, which is a new apartment with an additional meter for the most part, and after deducting the value of the old apartment, the plan is approved.

This means that the surplus apartments that the developer receives and any consideration that the tenant does not receive must be completely ignored.

It should be noted that it has been determined in principle that there is no impediment to utilizing exemptions from the improvement levy by the tenant in the construction of the construction addition to the owner's apartment, insofar as he meets the conditions of the law.

Adv. Eliran Dadon, a partner in the firm of Gindi Caspi & Co., notes that this is an important and correct decision, which examines the improvement levy from a purposeful and not formal point of view and serves the purposes of the legislation and the ruling trend.

In this way, de facto improvement is obtained, which is embodied in the price of the new apartment or due to the expected construction, and many distortions are avoided in calculating the levy through estimates and assessments of the project's profitability to the developer, which is a foreign factor in the Third Amendment.

This method of calculation provides certainty and efficiency in the imposition and collection of the tax, especially where it is a unique planning and property procedure of its kind, which the Planning Law has not yet properly contained and internalized in everything related to the improvement levy, therefore it is difficult to apply the third provisions of the Third Schedule.

Stings and scams

In the case of sting drills and real estate scams, does the lawyer representing the impostor bear responsibility?

A Supreme Court ruling handed down in August this year dealt with the question of the liability of the attorney representing a seller impersonating a real estate transaction.

The seller impersonated the registered owner using forged documents and disappeared after the scam was committed.

The registered owner, a foreign resident, demanded the cancellation of the transaction, but after it became clear that the buyers had innocently purchased it he filed a lawsuit against the lawyers representing the impostor.

The district court ruled that the attorneys who represented the impostor were negligent in ignoring warning signs regarding the kosherness of the transaction, which could not be ignored, and therefore they are responsible for the damage caused to the landowner in the amount of NIS 1.6 million.

 Permitted and forbidden in real estate transactions // Photo: envato elements

The Supreme Court quashed the tort bill of attorneys representing the impostor.

The decision ruled: "An attorney is not a detective or a private investigator.

He does not have special technical means at his disposal to detect acts of forgery and impersonation, and in the absence of warning signs that should have aroused his suspicion, he cannot be held absolutely responsible for preventing damage.

The imposition of an obligation on a lawyer to demand and investigate his client and to verify every statement and speech made by him, as a potential fraudster, is a decree that the public of lawyers cannot abide by. "

Adv. Shmuel Shuv, managing partner at Shuv & Co., notes that this is a ruling that requires real estate buyers and lawyers to exercise caution in making transactions. In every transaction, and certainly in case of suspicion, the seller's identification documents and ownership documents must be carefully checked. On the property.

Stopping urban renewal

Can the local authority stop urban renewal?

NAP 38 is a national master plan, which aims to strengthen buildings against earthquakes. The Ramat Gan municipality feared congestion on the city's infrastructure as a result of the issuance of building permits under the plan and decided to stop the permits by a decision of the local committee. A. 38 will be approved only in an exceptional manner.

The Bunei Ha'aretz Association filed a petition to revoke the decision of the local committee, arguing that the policy means almost complete annulment of the implementation of NAP 38 in Ramat Gan.

According to them, this is an illegal decision made without authority.

The court granted the petition and ruled that the authority of the local committee to refuse an application for a permit under the national plan is limited to planning, architectural, landscape or infrastructure carrying capacity.

Although there is a connection between the local authority's budget and its ability to provide infrastructure to its residents, it is not possible to impose all of the local authority's financial troubles on the approximately 3,400 buildings that remain to be promoted.

Advocate Anat Biran notes that this is a ruling that puts the local committee in its place and rules that a national outline plan outweighs the considerations of the local committee.

As for the Ramat Gan municipality, this ruling has not stopped the local committee in its attempts to block urban renewal projects, and it continues to outwit difficulties on apartment owners and developers trying to promote the strengthening of their buildings against earthquakes.

If that is not enough, then the director of planning decided this year to abolish NAP 38 and offer a replacement plan in its place, which gives all the power to the authorities and gives them the authority to decide on strengthening the buildings. The plan has not yet been approved, but in the face of some opposition leaders. After all, in case it is approved, many residents will continue to live for many years in old apartments without protection against earthquakes or missiles.

Apartment expansion

A precedent-setting decision by the Supreme Court will make it difficult for anyone wishing to expand his apartment, which is located in a shared house.

In most cases where apartment owners want to expand them, by adding a storage room or utilizing existing building rights, the additional construction is done in the common garden area. When the owners of the apartment on the top floor want to build an exit room, and the roof is not adjacent to their apartment, they actually want to The construction on top of property that is common to all the occupants of the building.

According to the law, in order to carry out construction on the common property area, the consent of 75% of the apartment owners is required, and those who have two-thirds of the common property are adjacent to their apartments, while when it comes to building a security, the consent of 60% of the apartment owners is sufficient.

The discussion dealt with the question of whether applicants for a building permit on the common property must present to the committee signatures of the majority required by law for the requested construction, or whether there is negative consent on the part of the apartment owners, ie a reference to the building permit application being issued to all apartment owners. This can be seen as consent.

Adv. Micha Gidron, a planning and construction expert and former chairman of the Tel Aviv District Appeals Committee, explains that the Supreme Court's decision stipulates that when a person wants to build on common property, he must submit to the local committee signatures of the other apartment owners, according to the majority.

For example, if you want to expand an apartment in a building that has 12 apartments, you must submit at least nine signatures to the local committee (including the permit applicant himself).

It should be noted that when there are apartment owners in a building who have already made a similar extension in their apartments, they are considered to agree to the requested extension and there is no need to sign them.

"The decision is expected to make it difficult for anyone who wants to expand his apartment," explained Adv. Gidron. "The local committees will now probably ask him for positive consent by presenting signatures, as a condition for discussing the application.

The decision protects the apartment owners in the condominium by preserving their common property. "

Resistance resistance

What is the power of tenants who refuse to thwart projects

So far, the ruling has tended to give impetus to building reinforcement projects in the face of the refusing tenant phenomenon, but an unusual ruling given several months ago in the Tel Aviv District Court gave the provisions of the Reinforcement Law an interpretation that could frustrate many projects.

The ruling deals with the TMA 38 project, which was previously for two adjacent buildings in central Tel Aviv, as part of which a robotic parking facility was planned, which would serve the occupants of the two buildings. Opposition filed with the Supervisor of Land Owners on the first floor of one of the buildings. , Was rejected.

They did not reconcile with the verdict and appealed to the district court.

Judge Limor Bibi accepted the appeal and reversed the Supervisor's decision, ruling that opponents of the project can be enforced only what is explicitly allowed in the reinforcement law, while any procedure that accompanies or handles the execution of a project requires the consent of all tenants.

Adv. Moshe Raz-Cohen, an expert in urban renewal proceedings: "According to the ruling, a decision regarding the construction of the parking facility that will be used by the two condominiums, in a way that will require mutual purchase of pleasure affiliations, exceeds the range of decisions governed by the Strengthening Law.

Accordingly, the provisions of the Real Estate Law apply to it, which require the consent of all apartment owners in each of the condominiums.

"This is an unusual ruling, because so far, the courts have used to enforce on an opposing minority even charges that are not explicitly mentioned in the reinforcement law. For example, although the contract with the developer for the project is not explicitly mentioned in the law, so far the courts have satisfied a two-thirds majority The apartments in order to impose it on all apartment owners. "

Potential harm

Should landowners be compensated for damage to the potential for unrealized planning change?

The Supreme Court has set a precedent-setting ruling on compensation for landowners under section 197 of the Planning and Building Act, due to impairment of planning potential.

According to the landowners, before the plans were approved, there was potential to thaw the land they owned from their agricultural designation for residence.

With the approval of the plans the potential faded, and for that they demanded compensation.

In their view, the market price of real estate should serve as a basis for calculating compensation.

The Supreme Court has ruled that compensation should be given only in cases where a concrete planning action that establishes the lost planning potential can be indicated.

The ruling defined a threshold condition: the existence of a deposited plan, which lays the initial basis for a reasonable expectation on the part of the landowners to realize planning potential, and a lack of apparent impediment to plan approval, in a way that puts the plan almost at a point of no return.

Haim Mesilati, Chairman of the Office of Real Estate Appraisers: "The court violated the status of the individual and the right to property, a fundamental right that collapsed without any justification.

The issue concerns land rights holders across the country.

This is a gross intervention by the court in the work of the appraiser, since the expertise is to determine the value of an asset and to calculate the impairment reserved for the real estate appraiser according to law. "

Adv. Moshe Raz-Cohen, a senior partner in the firm of Adv. Raz-Cohen, Freshkar & Co.: "Landowners, whose expected profit due to the increase in the value of the land is not the result of their labor or contribution to the economy, will now bear the risk of speculation. It is the role of the state or the local authority to ensure speculation at the expense of the public coffers. "

Evacuation of a rented hall

For the first time since the Corona crisis: The Magistrate's Court stopped the eviction of a ballroom owner in Tel Aviv.

The owner of the production company has been renting a property located in North Tel Aviv for about 6 years with great success and serves as an event and conference hall.

Due to the economic crisis that befalls us all and the events industry in particular, the hall owner paid the rent to the conference owner for the months of April and May only.

As for June, when to the delight of the hall owner the government allowed the ballroom owners to return to work under severe restrictions, the hall owner asked the property owner to consider paying the June installment while returning to the hall to operate so he could generate income and recover from the terrible crisis. The events.

The property owner showed no empathy for the situation and deposited the check, which eventually came back.

Following the return of the check, the owner of the property decided not to take into account the terrible situation in which the owner of the hall found himself, and announced without any warning that the lease for him had just ended unilaterally.

After this step, the landlord decided to replace the door locks in the place and also made sure to close the place with iron chains and cut off the electricity in the hall, a few days before a bar mitzvah event ordered by the hall owner.

Adv. Bilha Metzger and Adv. Sheli Edri, representing the owner of the hall, filed an application for an urgent restraining order in the Magistrate's Court in Petah Tikva. The court granted the request and granted a restraining order to the owner of the hall, so that he could continue the event hall.

Advocate Metzger, founder and CEO of the law firm MMG & Co: "Following the restraining order granted by the judge on the request we submitted, the bar mitzvah event took place on time and with great joy. It is important to understand that the hall owners are among the main victims of the Corona crisis. "To deal with the property owners, and not the role of decision-making in the hands of the courts. It is also appropriate for the government to flow funds to an industry that is in a deep crisis of necessity."

The order granted by the court was given the force of a judgment in a settlement agreement between the parties, and the lease will remain in force as long as the rent is paid, i.e. by 2024, and the contract cannot be rescinded unilaterally.

Purchase without auction

Due to the failures of the municipality the High Court obliges the Minister of the Interior to recognize the transaction for the purchase of a property without a tender.

The new law, unanimously approved by three Supreme Court justices, required the interior minister to approve the sale of an apartment purchased from the Rehovot municipality by a city resident 43 years ago.

This follows a petition filed by the buyer.

Only now can the buyer transfer the rights in the property in his name.

A one-and-a-half-room apartment in the center of Rehovot was purchased in 1976 in accordance with a market price set by a real estate appraiser on behalf of the Rehovot municipality, which even approved the deal in the city council.

In the agreement, the municipality undertook to obtain the approval of the Minister of the Interior for the sale transaction, as commanded by it in the Municipalities Ordinance, as well as to ensure that the rights are registered in the register in the name of the buyer.

But over the years it became clear to the purchaser that the municipality had not met these obligations, despite repeated inquiries.

Only in 2011, 35 years late, did the municipality contact the minister, but he refused on the grounds that a tender should be held.

In 2018, Adv. Oren Abella filed a petition on behalf of the purchaser to the High Court against the Minister of the Interior and the Rehovot Municipality, 42 years from the date of purchase of the apartment.

Advocate Abella: “After it was found that the original sin originated in the conduct of the municipality itself, and not at the behest of the petitioner, the judges obliged the Minister of the Interior to approve the sale transaction.

Due to the conduct of the Rehovot Municipality for many years, it was also obligated to bear the buyer's expenses in the amount of NIS 15,000. "

Impairment compensation

How is impairment compensation determined following a roadmap?

It was determined that when assessing impairment compensation under section 197 of the Planning and Building Act, for the impairment of a road plan (Route 431), the value of compensation will be reduced due to national and district outline plans approved in the vicinity of the relevant real estate.

This is despite the fact that it was clear that the harm could not be identified, since the scale of the plans is small and they include flexible provisions that allow the route to be changed for various reasons at the detailed plan stage.

In light of this, these plans are referred to as a "planning cloud", so it was in any case impossible to file impairment claims in respect of them.

Adv. Zvi Shuv, an expert in real estate and planning and construction, says that "this is a significant determination that affects the level of compensation, because usually when planning roads, a national or district master plan is approved first, and then a detailed plan for the same road is approved, which only allows it to be paved. .

"The level of detail and clarity of national and provincial plans is not high, so when owners file compensation claims following approval of such plans, they are rejected because they do not allow for identification of damage to real estate (the route may be adjusted in a detailed plan due to engineering constraints and the like).

The result is that the impairment claim can only be filed after a detailed plan is approved.

However, in light of the Supreme Court's ruling that the amount of compensation should be reduced due to previous master plans, the value of the impairment compensation to be paid to the plaintiff for the detailed plan will be significantly reduced, and thus the damage to individual property is great. "

Punctuality

What happens when an entrepreneurial company, which undertakes to complete a renovation and strengthening of a building within 15 months, is hugely late?

It is obligated to pay huge sums of close to one million shekels

A resounding verdict, handed down last week in the Tel Aviv court (by Judge Guy Heiman), ruled that an entrepreneurial company would pay about NIS 1 million for late receipt of Form 4. Compensation will be given to dozens of tenants who had to live on a construction site 16 months after the agreement.

In doing so, the court placed a warning sign for developers who do not meet their obligations and show indifference to the building's occupants.

The project in question included strengthening, expanding and building an elevator in a building on Anonymous Hero Street in Tel Aviv.

The agreement established an agreed compensation mechanism: for the first 60 months of delay, NIS 1,000 per day, and for the subsequent period NIS 2,000 per day.

The developer chose to try to place the responsibility in court on a third party, the Halamish mortgage company, which owns one of the apartments in the building.

The company's claims were rejected one by one.

The judge ruled that the signature of 75% of the building's rights holders was sufficient, and therefore the lack of a signature of one apartment (owned by Halamish) did not raise or lower the completion of the works.

He further stated that the company started work before the signing of Halamish and continued with the work after it signed, so of course there is no connection between the delay and the lack of signing.

The court ruled that the order of things according to the agreement and the simple logic is that first build and renovate and only then proceed to the work of registration and amendment of the joint house order.

"The connection between the delay in the amendment of the joint house order and the delay in the contractual schedule was born only in an attempt to defend against the lawsuit. It has no mention in the agreements entered into, has no mention in the conduct of the parties, and has no anchor in the obligations subject to this case."

The court accepted the claim in full and even ordered the company to pay legal costs and fees.

The tenants will be represented by attorney Ron Turkeltaub.

Advocate Ravit Sinai, who represents tenants in urban renewal: "This ruling is important because it is time for developers to stop underestimating their contractual obligations to tenants living on a construction site.

I hope it will give tenants hope not to be afraid to back up what they deserve. "

Produced by the Department of Special Supplements