Magistrate Court Ruling: Compensation for Construction Defects and Late Delivery of Apartment

By: Attorney Michael Lev

Magistrate Court Ruling: Compensation for Construction Defects and Delayed Apartment Delivery

Our office handles numerous disputes arising from apartment purchases from contractors: construction defects, late deliveries, and everything in between. Recently, the Magistrate Court issued a significant ruling in case T”A 76124-12-20, clarifying how the legal system approaches these critical issues and providing important guidance for apartment buyers.

What Happened: The Facts of the Case

In this case, the plaintiffs purchased an apartment from S. Shtrit Engineering on July 21, 2016, at Rehov Negba 26 in Ramat Gan. Per the purchase agreement, the apartment was to be delivered on May 21, 2018. But the actual situation was very different from what was stipulated in the contract.

When the plaintiffs received the apartment, it turned out to suffer from significant construction defects. As if that were not enough, the delivery itself was delayed beyond the date stipulated in the agreement. As a result of this situation, the plaintiffs filed a claim against the contractor seeking compensation. Subsequently, the plaintiffs sold the apartment in February 2022 to a third party for 2,290,000 NIS.

Examining the Defects: The Role of the Expert

When construction defects are at issue, courts take a structured approach: they appoint an expert to assess the damage objectively and estimate the repair costs. In our office, we know that a quality expert opinion is the key to success, as it often determines the outcome of the settlement.

In our case, the expert appointed by the court inspected all the defects carefully and determined that repair costs would total 12,870 NIS. The court did not deviate from the expert’s opinion and accepted his valuation as-is.

The Contractor’s Defenses and Their Rejection

The contractor tried to defend himself on various grounds. Regarding the delay, he argued that the delays were not under his control, due to local permit issues and regulatory factors.

The court rejected these arguments in their entirety. Judge Udi HaKar made one thing clear: the Sale (Apartments) Law provides mandatory protective provisions that cannot be waived. This is not an opinion — it is law. Moreover, the court established an important principle: the contractor must factor in the risks of permit delays as part of his project planning. The buyer does not need to bear the contractor’s problems.

What the Court Decided

The claim was accepted, though not in full. The court approved compensation of 15,912 NIS for construction defects, based on the expert’s assessment of repair costs at 12,870 NIS.

In addition, the court ruled that the contractor must pay compensation also for the delay in delivery. This ruling sends a clear message: courts do not tolerate contractors who cheat their customers.

What We Learned: Key Principles and Applications

This ruling holds several important lessons for apartment buyers. First, an expert opinion appointed by the court is a powerful tool in such cases, and often determines the outcome. In handling cases like these, we invest substantial resources in the preparation phase of the expert opinion.

Second, the Sale (Apartments) Law is a practical protection tool. It does not allow a contractor to escape his liability through a one-sided agreement. The law recognizes that the buyer is the weaker party, and therefore protects him.

Third, and notably, the contractor cannot transfer responsibility for delays onto the permits. Courts tell the contractor: you must plan your project to account for all risks, including permit delays. This is part of your business — not the buyer’s problem.

Questions and Answers

We discovered construction defects in the apartment we purchased. What do we do now?

The first step is thorough documentation of the defects. Document everything with photos and videos, and write an organized list. Then send the seller a formal letter detailing all the issues. If he does not act within a reasonable time, it is time to consult an attorney. We accompany clients throughout the process, from documentation to receiving full compensation.

We sold the apartment afterward. Can we still sue?

Yes, absolutely. In the ruling before us, the plaintiffs sold the apartment two years after purchasing it and still received compensation. The breach occurred at the time of delivery, and your compensation for this breach is not dependent on what happened afterward.

Is there a set time limit to sue?

Yes, the Sale (Apartments) Law sets different limitation periods for different defects. We strongly recommend: if you suspect a problem, seek legal advice promptly. Do not delay until tomorrow — act today. Every day that passes brings you closer to the limitation period.

The contractor says the delay was not his fault. Does that release him?

No. As we saw in this ruling, courts do not accept this argument. The contractor must plan his project to account for all risks, including permit delays. That is part of his business — not your problem as the buyer.

Want to know more? Contact our office for a free consultation.

This content does not constitute specific legal advice. For guidance tailored to your situation, contact our office.