Construction Defects in Common Property – An Important Ruling in Apartment Sale Law

By: Adv. Michael Lev

Construction Defects in Common Property – An Important Legal Ruling

In 2009, the Tel Aviv-Jaffa District Court issued an important ruling by Judge Naftali Shiloh, establishing significant precedents in apartment sale law and construction defects in common property. This ruling holds great importance for our firm, as it establishes clear principles regarding construction companies’ liability towards apartment buyers in cases of severe construction defects.

The case concerns residents of a housing project at Eliezer Shiloni Street in Jerusalem who purchased apartments from Peretz Bonei HaNegev. After apartment delivery, severe construction defects were discovered in the common property, including flooding and dampness in the parking lot, sealing problems, cracked floor tiles and additional defects that harmed quality of life and asset value.

Concealment and Bad Faith by the Contractor

An important aspect of the case was the conduct of the defendant company after the plaintiffs requested it to repair the defects. From June 2016 the residents repeatedly approached the company with repair requests, but received no response. This concealment created a deep rift between the parties, and this fact was considered critical in the court’s decision.

At our firm, we see such concealment as a classic example of negligence. When a developer or contractor ignores legitimate repair requests, he risks losing his right to perform the repair himself and being required to pay substantial monetary compensation.

The Expert’s Role in the Process

The court appointed engineer Haim Glantzer as its expert to examine the defects and assess the damages. The expert determined that repair costs would be 470,585 shekels and property value decline 549,538 shekels. This step is common in cases of this type, since engineering expertise is required to determine the extent of defects and the cost of repair.

The construction company tried to cast doubt on the expert’s findings and argued that the matter concerned maintenance issues, not construction defects. It also argued that the expert had contradicted himself in his conclusions. The court, however, rejected these arguments and determined that it would rely on the expert’s opinion it had appointed, unless exceptional circumstances justifying deviation from his conclusions were revealed.

Loss of the Right to Repair and Monetary Obligation

One of the important findings in the ruling is clarification of the conduct of the construction company and the rift created between the parties: the defendant lost her right to repair the defects herself and was required to pay monetary compensation. This is a vital principle in apartment sale law: a contractor who ignores legitimate repair requests or acts in bad faith risks losing the opportunity to perform the repair himself and being liable for substantial monetary compensation.

The total compensation determined reached 1,813,710 shekels. This includes repair cost increases (644,172 shekels), property value decline (549,538 shekels) and also non-monetary damages (620,000 shekels). The non-monetary compensation covers discomfort, suffering and disruption caused to residents by the defects.

Representation of Common Property in the Claim

The ruling establishes a significant principle regarding representation of common property in claims. The court determined that common property representation acts on behalf of all residents, including those who did not join the claim personally. This principle is important because it allows efficient handling of construction defects in common property without requiring the agreement of every individual resident.

Our firm sees in this ruling significant precedent that reinforces the legal tools for efficient handling of construction defects in common property. The ruling teaches that apartment buyers are entitled to full compensation when a construction company does not deal with defects as required.

What Apartment Buyers Need to Know

This ruling provides important guidance to apartment buyers facing construction defects in common property. From the ruling it emerges that it is vital to approach the construction company in writing and keep records of all repair requests, because the company’s concealment can lead to loss of its right to repair and consequently to substantial higher compensation.

In addition, the ruling emphasises the importance of appointing a professional expert to determine the defects and assess the cost of repair. Court-appointed expert opinion ensures an independent and professional assessment of the damages.

What happens when a contractor ignores repair requests?

When a contractor ignores legitimate repair requests, he risks losing his right to perform the repair himself and being required to pay substantial monetary compensation. The court determined that the construction company’s concealment was acting in bad faith, and this justified imposing monetary liability on it instead of allowing it to repair.

Can common property representation represent all residents in the claim?

Yes. According to the ruling, common property representation represents all residents, including those who did not join the claim personally. This is the significant principle that allows handling construction defects in common property efficiently.

What does compensation in construction defect claims include?

Compensation can include repair costs, property value decline and non-monetary compensation for the suffering and discomfort caused. In the case at hand total compensation reached 1.8 million shekels.

When does a contractor lose his right to repair defects himself?

A contractor risks losing his right to repair when his conduct reveals bad faith, when there is a deep rift between the parties or when apartment buyers have lost reasonable trust in the contractor. In these situations the court may impose monetary liability on the contractor instead of giving him the opportunity to repair himself. For advice on construction defects and apartment sale law, contact our firm today.

What happens if the construction company ignores repair requests for construction defects?

According to the ruling, a construction company that ignores legitimate repair requests risks losing its right to repair itself. Instead, it will be required to pay substantial monetary compensation including repair costs, value decline and non-monetary damages.