Compensations for late delivery of new apartments

Developers can no longer rely on changes to an apartment, requested by the purchaser, as reason to avoid payment of compensation for late delivery. This was ruled recently by the Supreme Court in a case involving a dispute between purchasers of an apartment and a contracting company.

The Sale (Apartments) Law states that a delay of over 60 days from the date specified in the sale contract for the delivery of the apartment to the purchaser, means that the purchaser will be entitled to compensation without proof of damage, and this from the first day of delay.

In the above mentioned case, the sale contract which was signed by the purchasers and the contracting company stated that any request to change or supplement the apartment will postpone the delivery date of the apartment for at least 60 days.

It should be noted that clauses of this nature are common and appear in almost every sale contract from a contractor.

The Supreme Court ruled that the wording of the relevant clause is broad and vague, and gives the contractor unlimited options to determine the date of delivery, which creates uncertainty among the purchasers. Thus, the contractor prevents the purchasers from preparing themselves for a new and clear date on which the apartment will be delivered to them, and to plan their moves accordingly.

The Court further ruled that from now on, the contractor cannot rely on sweeping clauses in apartment sale contracts, which include provisions exempting him from paying compensation for delays in delivery of apartments, in any case where changes to the apartment were ordered by the purchasers.

However, the Court held that the parties can agree, for example, on a new and concrete postponed delivery date, in the case of making changes in the apartment at the request of the purchaser, in a later agreement signed by the parties.

The Court also noted that a new and postponed delivery date that will be determined by agreement, as mentioned, may be examined by the Court, in terms of its reasonableness in relation to the scope of changes made to the apartment and their nature.