Claim for late delivery of an apartment: when and how to sue the developer

What is the buyer entitled to for late delivery?

Under section 5A of the Sale (Apartments) Law, in contracts to which amendment no. 9 applies, compensation is due without proof of damage once a month has passed from the contractual date: the rent for a similar apartment until the end of the fourth month, 1.25 times from the fifth to the tenth month, and 1.5 times from the eleventh month onwards, or the compensation set in the contract if it is higher.

The version that applies to you depends on the date the contract was signed, so first check the signing date and the delivery clause. A full explanation of the rules, with worked examples, is in the guide to late delivery on dira-law, and the amount can be estimated with the late delivery compensation calculator.

When do you turn to a claim?

• The developer denies there was a delay, or argues that the contractual date was postponed.
• The developer admits the delay but offers compensation lower than the law provides.
• The developer makes delivery of the apartment or payment of the compensation conditional on signing a waiver.
• The monthly compensation was not paid on time.

Before a claim, a detailed written demand is sent to the developer. Signing a waiver or a settlement at the delivery stage may harm the right to sue, so it is worth taking advice before signing. On waivers, see repair or compensation, and waivers.

What do developers rely on, and how is it checked?

The dispute in delay cases is usually about which date is decisive and what counts as a justified delay. The following are checked:

• The contractual date. What the contract says, and whether an addendum postponing it was signed.
• The postponement clauses. In which circumstances the contract lets the developer postpone delivery, and whether those circumstances actually occurred and actually caused the delay.
• The developer's notices. Whether the developer gave notice of the postponement at the time and in the manner set in the contract.
• The actual delivery date. The date the apartment was delivered fit for habitation, not the date the developer invited the buyer to take delivery.
• The buyer's conduct. Whether a payment the buyer made late, or changes the buyer ordered, affect the calculation.

What evidence is needed?

• The sale contract with all its annexes and addenda.
• The developer's notices of the delivery date and of postponements.
• The delivery protocol and the date the key was received.
• Proof of the rent for a similar apartment in the area, usually an appraiser's opinion.
• Correspondence with the developer and the demand for compensation.
• Proof of further damage, if claimed, such as rent actually paid.

Where is the claim filed?

The court is determined by the amount. A claim of up to NIS 75,000 is heard in the Magistrates Court on the fast track (regulation 78 of the Civil Procedure Regulations, 5779-2018), and a claim for a low amount can also be filed in the Small Claims Court, up to the ceiling set by law. The court fee can be calculated with the court fee calculator, and the interest and linkage on the amount with the interest and linkage calculator.

Where there are also construction defects in the apartment, consider whether to combine the two causes in one claim. See the construction defects page.

What happens when the project runs into difficulties?

When the developer collapses and the project is completed by a receiver on behalf of the financing bank, the question of compensation for the delay becomes more complicated. On the Supreme Court judgment on this, see compensation for delay when the financing bank completes the project.

About the author

Adv. Amos Ilan is a lawyer (license no. 35320) and notary (license no. 214444). The office, at 17 Tzahal Street in Ness Ziona, handles real estate transactions, construction defects, condominium disputes and civil litigation. Alongside his legal work he has practical knowledge, not based on formal training, of engineering, property appraisal and electrical and building systems, and he personally conducts the cross-examination of experts in construction defect cases.