High Court Bans Contractor ‘Shtick’ on Late Handover of Keys to Buyers

Arab construction workers in Beitar Illit. Photo by Nati Shohat/Flash90
Construction in Beitar Illit. (Nati Shohat/Flash90)

Contractors cannot add conditions to contracts that would exempt them from laws that require them to compensate buyers of homes who receive them past the date they are supposed to get the keys to their new home, the High Court ruled Monday. With the decision, a long-running case that started out two years ago in small claims court in Haifa comes to an end – in favor of the “little guy.”

The court involves the purchase of a home by a couple in a new project in Kiryat Ata. The buyers signed a contract in January 2012, which stipulated that the home would be ready for entry by June 2013. Any delay would result in compensation of NIS 7,000 per month.

In the end, the couple did not get the keys until January 2014 – a delay of 7.5 months. According to the law, buyers of homes are eligible for compensation automatically 60 days after the due date without the need to prove damages (which they must do in the first 60 days, showing that they had to pay rent in lieu of entering their home). As such, the couple filed a claim and waited for their check, since the financing for the home had been completed already.

But the company, Space Construction, claimed that it was not responsible for the full sum. A tenet of the contract, it turned out, said that the company could claim a 60-day “exemption” for each change the buyers made in the original building plan for the home. Since the couple had made various changes, the company was responsible for only three and a half months of delay payments.

The couple filed a claim demanding full payment in Small Claims Court, which accepted their position that the law on late compensation superseded any conditions that contradicted that law. The company appealed, and a Haifa district court ruled that the company could reduce the compensation payment, at least partially. The couple then filed a petition with the High Court, which ruled in their favor.

In a statement, the court said that “we cannot dismiss the concerns of homebuyers who are liable to find themselves imprisoned by a contractor who refuses to compensate them for his lateness. In most cases, the buyer has already fully paid for the property, and many buyers fear that standing up for their rights will just lead to even more delays. Meanwhile, the buyer has nowhere to go, and is significantly damaged” due to the high rents they have to pay.

The couple’s attorney told Globes that the ruling was the only logical one possible. “Delays in handing over the keys to homebuyers is a major problem and a very painful one. In many cases, the final date of entry into a home is a riddle that has no answer – certainly not the date listed in the contract – and the contracts themselves are full of small print that few understand, even if they can read them, that contractors use to excuse themselves from the law.

“We are satisfied with this decision, which enhances the rights of homebuyers and rids the world of the absurd practice of contractors ‘mining’ the purchase contract for artificial reasons justifying delays in fulfilling that contract,” the attorney added.