The developer of a 'Price for Residents' (Mehir LaMishtaken) project in Kiryat Shmona handed over the apartments many months late, and argued that Covid, the weather, military activity and the water corporation released it from paying compensation. The District Court rejected every argument and ordered it to compensate the buyers; on 9.11.2026 the developer withdrew its appeal in the Supreme Court on the judges' recommendation.
What happened
A developer won a Ministry of Construction and Housing tender to build 210 apartments in the Yuvalim neighbourhood of Kiryat Shmona, under the 'Price for Residents' programme. The apartments were handed over late, in most cases by more than a year and in the longest case by almost 18 months. Two groups of buyers, over 200 claimants in total, sued the developer in the Nof HaGalil-Nazareth District Court for compensation under section 5A of the Sale (Apartments) Law, relying on an appraiser's opinion on the rental value of each apartment. They also asked for compensation for distress.
The developer's arguments
The developer argued that the delay was caused by circumstances beyond its control: it received the plots only a few months after it began selling apartments, the Covid pandemic delayed supplies and workers, a storm damaged the site, military activity to locate tunnels blocked access roads, and the water corporation was slow to approve plans. It also argued that buyers who asked for changes to their apartments had thereby agreed to a later handover, and it brought third-party claims against the water corporation.
The District Court's decision
The court (judgment of 21.5.2025) held that the section 5A scheme is mandatory and cannot be waived to the buyer's detriment. Contract clauses that let a developer postpone handover without setting a clear new date are not valid. Under the version of the law that applied to these contracts, before Amendment No. 9, a developer is exempt only if it proves circumstances beyond its control that it could not have foreseen, and the burden is on the developer. It did not meet that burden:
- It signed contracts and committed to a handover date knowing it did not yet have the plots.
- On Covid, it gave no dates or evidence of work stoppages, and construction was exempt from the lockdowns.
- It brought no evidence about the storm or the military activity, and weather delays are foreseeable.
- Agreeing to changes in an apartment is not agreeing to postpone the handover.
- The water corporation responded quickly, and the plan change arose from the developer's own design.
Compensation was calculated using the buyers' appraisal, since the developer filed no opposing opinion: 1.5 times the rent for the first eight months and 1.25 times after that, less partial compensation already paid, plus interest and linkage. Where an apartment was not connected to electricity, the actual handover date was set as the connection date. The amounts per apartment range from about ILS 23,000 to about ILS 124,000, more than ILS 7.5 million in total. No additional compensation for distress was awarded, because the statutory compensation already covers it.
The outcome
The developer was also ordered to pay costs and legal fees of ILS 335,000 to one group and ILS 301,000 to the other, plus ILS 75,000 to the water corporation after the claims against it were dismissed. The claim against one of the developer's owners personally was dismissed, as no grounds for personal liability were shown. The developer appealed to the Supreme Court. At the hearing on 9.11.2026, after hearing its arguments, the judges did not ask the buyers to respond. The developer accepted their recommendation and withdrew, and the appeal was dismissed with ILS 25,000 in costs to the buyers.
Key takeaways
- Compensation for late handover under the Sale Law is due without proving loss, and an open-ended postponement clause in the contract does not cancel it.
- A developer claiming circumstances beyond its control must prove them with real evidence; a general reference to Covid or the weather is not enough.
- If your apartment was not connected to electricity, keep proof of the connection date (for example, messages with the developer): it may count as the real handover date.
- An appraisal of the apartment's rental value is the basis for calculating compensation.
- Check in advance what you are owed under the version of the law that applies to your contract, for example with the late-handover calculator on this site.
This article summarizes a published Israeli court decision in plain language and is not legal advice. Every case depends on its facts. The parties' names have been omitted.
