Over the years, amendments have been made to the Sales Law (Apartments) – 1973, aimed at giving purchasers of apartments from contractors increased protections. These include:
1. A technical specifications detail must be attached to the sale contract, in the detailed format set out by the Law. The “specs” must include a pricelist of items that a purchaser can choose not to receive from the contractor, the cost of altering the position of items, and the cost of requesting additional items. A purchaser wishing to make any of the above changes, will notify the contractor in writing not later than the date for such notification as set out in the sales contract, which date cannot be earlier than 6 months after the foundations of the building have been cast. The contractor is obligated to furnish the purchaser with amended specs after he has received this notification from the purchaser.
2. The Law provides that the contractor has not fulfilled his obligations to the purchaser in the following circumstances (one or more) –
a. The apartment built is different to the agreed specs, or official standards, or building regulations;
b. During the warranty period(s) as stated in the Law, a non-conformity is discovered (unless caused by the purchaser);
c. During the warranty period(s), a non-conformity is discovered, and which is the result of the planning, the workmanship, or the materials used;
d. The contractor did not furnish the purchaser with the designated maintenance manual for the apartment;
3. The purchaser has one year to inform the contractor of any non-conformity in the apartment, commencing from when he has received possession of the apartment. The purchaser must afford the contractor an opportunity to repair the non-conformity, and the contractor is obliged to do so within a reasonable period.
4. Should the non-conformity recur after the contractor has repaired the defect one or more times within a 2-year period after the purchaser has notified the contractor of the non-conformity, or in the event that the contractor not repairing an urgent repair within a reasonable period, the purchaser is entitled to fix the non-conformity himself, and the contractor will bear the costs of the repairs (or refund the cost to the purchaser).
5. Compensation to be paid to the purchaser resulting from late handover:
a. A contractor can delay the handover for up to 60 days from the handover date listed in the sale contract, without having to pay the purchaser any compensation. This period is in addition to delays caused by events beyond the control of the contractor (such as war, national shortage of essential building materials, changes requested by the purchaser, late payments by the purchaser to the contractor). Should the delay exceed this 60 days (or more) permissible delay, the contractor is obliged to compensate the purchaser as follows –
(1) An amount equal to 1.5 times the rental for that apartment, commencing from day 1 (NOT day 61) and up to 8 months (if the apartment has still not been handed over to the purchaser);
(2) An amount equal to 1.25 times the rental for that apartment, beginning from month 9 after the apartment was supposed t have been handed over;
The above stated compensation amounts are to be paid over to the purchaser at the end of each month in respect of that month. Thus on day 60 of the delay, the contractor is to pay the purchaser for the first 60 days delay.
6. Cap on the interest that a contractor can charge a purchaser for late payments –
The current interest rate is 12% per annum. Interest is not payable in respect of the first 7 days delay in making a payment.
7. Cap on the legal fee that a contractor can demand that the purchaser pay to the contractor’s attorney as legal fees: this is at present NIS 5,000 or an amount equal to 0.5% of the purchase price – the lesser of these amounts. VAT needs to be added.
8. Period of warranties – beyond the standard one-year warranty
a. Carpentry, aluminum and plastic – 2 years
b. Flooring and wall ceramics work – 2 years
c. Machinery and boiler – 3 years
d. External development work – 3 years
e. Defective piping, including water, heating and sewerage – 4 years
f. Defective waterproofing – roofs, walls, and flooring – 4 years
g. Cracks larger than 1.5 cm in non-load-bearing walls- 5 years
h. Outside wall coverings coming loose – 7 years
As some of these protections were only enacted in 2011 and 2014, contracts signed before the changes went into effect, will not be governed by these changes.
Morris Rubin is an advocate and notary in private practice in Jerusalem for the past 32 years, specializing in real estate, deceased estates, and commercial practice.
He can be reached at rubin@netmedia.net.il, 0522600917, and 02-5637768.