Sale Law (Apartments): Complete Guide for Apartment Buyers

The Sale (Apartments) Law, 1973, is one of the most important laws for anyone who purchases a new apartment from a contractor in Israel. The law defines the buyer’s rights and the contractor’s obligations, and provides significant protection against construction defects. This guide explains the key provisions of the law in plain language.

What the Sale (Apartments) Law Establishes

The law establishes three central subjects: first, the contractor’s obligation to provide a bank guarantee (or insurance) for all payments made by the buyer. Second, the contractor’s obligation to complete the construction and deliver the apartment by the agreed date, with payment of compensation for delays. Third, the contractor’s obligation to repair defects during defined inspection and warranty periods.

Inspection Periods by Type of Defect

This is the core of the law from the perspective of construction defects. Here is the table of inspection periods:

• Installation defects (plumbing, sanitation, drainage): one year.
• Flooring, tiles and cladding: two years.
• Plastering and finishing work: two years.
• Waterproofing of roofs, balconies and storage rooms: three years.
• MMD (protected residential space): three years.
• General construction defects not listed in the specific sections: three years.
• Central installation systems and drainage: four years.
• Foundation and structural defects in load-bearing walls: seven years.

After the expiry of each inspection period, there is a further one-year warranty period. During the warranty period, the contractor is responsible for defects that arose due to non-compliance with the specification or standards.

What Defect the Contractor Is Obligated to Repair

The law defines “non-conformity” as when the apartment does not match what was agreed in the sale contract, does not comply with applicable building regulations, or is not suitable for its ordinary and intended use.

Defects defined as “non-conformity” oblige the contractor to repair, compensate if agreed to operate, the buyer is entitled to claim financial compensation.

How to Give Notice of a Defect Under the Law

The law requires the buyer to notify the contractor of the defect within a reasonable time after discovering it. Notice that is delayed without reason may harm the buyer’s rights. The notice must be in writing, specify the defect, and be given within the inspection periods.

Compensation for Delay in Delivery

The Sale (Apartments) Law provides automatic compensation to the buyer whose apartment was delivered late. The compensation is calculated at 150% of reasonable rental rates for a comparable apartment, for each month of delay (after one and a half weeks).

The contractor can negotiate for lower compensation only under specific conditions fixed in the law, and if there was a delay caused by “circumstances beyond his control”.

Bank Guarantee Under the Sale Law

One of the greatest achievements of the Sale Law is the contractor’s obligation to provide the buyer with a bank guarantee (or insurance) that covers all payments the buyer transferred. If the contractor fails to complete the project, the buyer can exercise the guarantee and recover his money.

5 Frequently Asked Questions

Does the Sale Law apply to second-hand apartment purchases?

The Sale (Apartments) Law applies originally to purchasing a new apartment from a contractor. However, inspection rights pass with the apartment, so a second-hand buyer who is within the inspection period can claim against the original contractor. Relationships between second-hand seller and buyer are governed by other laws, such as the general Sale Law.

Can I waive my rights under the Sale Law in the contract?

No. Section 7a of the law states that any agreement that derogates from the law, shortens inspection periods, or limits the contractor’s liability against the law, is void. The contractor cannot cause the buyer to waive his rights by law.

What is the “warranty period” and how does it differ from the “inspection period”?

During the inspection period, the burden of proof is on the contractor: if a defect is found, it is presumed to be his responsibility unless he proves otherwise. During the warranty period (one year after the inspection), the buyer must prove that the defect arose due to non-conformity with specifications and standards.

What do you do when the contractor claims the defect was caused by the buyer?

The contractor must prove this, not merely allege it. An engineer’s expert opinion confirming that the defect arose from a construction failure and not from the buyer’s use is the best way to deal with this allegation.

Can I claim defects that were not recorded in the handover protocol?

Yes. The handover protocol documents known defects at the handover date, but defects that emerge later and are found within the relevant inspection periods may be claimed. It is important to notify the contractor of them in writing as soon as they are discovered.

For free advice on construction defects, contact the Lev-Taieb office: 072-2428822. Construction defects lawyer.