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Modifications to an Apartment at the Purchaser’s Request Do Not Constitute Just Cause for Late Delivery of Possession

A recent judgment by the Hadera Magistrate’s Court upends the common view currently reflected in agreements for the purchase of an apartment from a developer. The ruling holds that modifications to an apartment made at a purchaser’s request do not constitute just cause for late delivery and that the purchaser must be compensated for any delay.

 

In agreements for the purchase of an apartment from a developer, it is customary to include a provision that if the purchaser requests to make modifications, the delivery date of the apartment will be delayed accordingly, in order to allow the developer to perform the requested modifications.

 

In the case at hand, the apartment was delivered to the purchaser three months after the delivery date stated in the purchase agreement. The modification agreement signed between the parties did not detail the modifications requested by the purchaser, but did state explicitly that the purchaser agreed that due to the performance of the requested modifications, the completion of the apartment would be delayed and the delivery date would be postponed by twelve weeks beyond the delay periods established in the purchase agreement.

 

The court ruled that the developer must pay compensation to the purchaser, for several reasons:

  1. Section 5(a) of the Sales Law (Apartments), which protects apartment purchasers, stipulates that a purchaser be compensated for late delivery of an apartment over 60 days. In this case, the delivery was delayed by more than 60 days and thus the purchaser was entitled to compensation.
  2. An apartment’s delivery date is a factor of great importance to the purchaser. A delay in delivery of possession may leave the purchaser without a solution for alternative housing and thus cause the purchaser financial harm.
  3. A distinction must be made between the parties’ agreement to a new date for delivery of possession and using the purchaser’s request for modifications as an excuse to exempt the contractor from the duty to pay compensation.
  4. The developer failed to show that the modifications requested by the purchaser (changing models of sanitation supplies, without moving any walls) justified a delay in the delivery date.

 

In conclusion, it appears the court is in no rush to accept the agreements between parties as they have seemingly been set out in purchase agreements. The court recognizes the power imbalances between the parties and their intentions, and will prevent the application of provisions that are unreasonable and run afoul of the spirit of the law.

Tags: Compensation | Late Delivery | Real Estate