Developer Ordered to Pay 440K NIS in Petah Tikva Penthouse Delay

A Herzliya Magistrate Court has ordered a real estate developer to pay 443,775 NIS in compensation to a couple for a 35-month delay in handing over a penthouse apartment in Petah Tikva, plus 70,000 NIS in legal fees and expenses. Judge Ayelet Harnof rejected the developers claim that the Swords of Iron war caused the construction delays.

The couple, Yacov Arie and Hedva Shkolnik, signed a contract in August 2021 for the penthouse in a TAMA 38 urban renewal project built by Hatzadut - Haim Cohen 28 Petah Tikva. The company was contractually obligated to deliver the apartment by August 11, 2023. More than three years later, the keys have still not been handed over.

The developer relied on a contract clause allowing delivery dates to be postponed in the event of war, military mobilization, or a shortage of workers, arguing that the war caused a severe labor shortage and constituted force majeure. However, the judge pointed out that the original delivery deadline was set roughly two months before the war broke out, meaning the apartment was already delayed prior to October 7, 2023. Had the defendant built the project on schedule, the apartment would have been delivered before the war, and neither party would have had to bear its consequences.

Testimony Undermines Developer's Defense

Furthermore, the court established that the war was not the actual cause of the delay. During cross-examination, company representative Nir Shar described a chain of severe failures with contractors. Throughout 2023, the company faced major issues with its first contractor, who stopped working independently, threatened company staff, and refused to leave the site until early 2024, when he was paid off.

Shar testified that within a week of the second contractor starting work, individuals arrived and violently removed him from the site, halting work for another two to three months. Problems were evident even before the war; at a July 2023 meeting with tenants, a company representative admitted that work had stopped for two weeks due to financial disputes and announced a one-year delay.

Issues persisted with the second contractor, who worked without a signed agreement until July 2025. Shar admitted the company was essentially extorted and that poor management was to blame. By late 2025, that contractor also vanished from the site, forcing the company to complete construction itself under the supervision of the project's financing body. Regarding labor shortages, Shar contradicted the company's own defense by stating that once the second contractor entered, there was no shortage of workers.

Entrepreneurial Risk and Statutory Compensation

The court ruled that engineering challenges and contractor violence are business risks that fall squarely within the developer's core responsibilities under the sales agreement. The purchasers bear no responsibility for contractor management, project budgeting, or construction hurdles.

The company also attempted to reduce the compensation payout, pointing to a contractual clause stipulating 5,000 NIS per month of delay and a 60-day grace period. However, the Sale (Apartments) Law mandates that home buyers are entitled to compensation based on the higher of two calculations: the contractual amount or the rental value of a comparable apartment multiplied by 1.5 for the first eight months and by 1.25 for every subsequent month.

A surveyor hired by the couple estimated the monthly rent at 9,700 NIS. The defendant failed to submit an opposing expert opinion or cross-examine the surveyor, leading the court to accept the assessment. Consequently, the compensation was set at 14,550 NIS per month for the first eight months and 12,125 NIS per month thereafter. Under the contract, the couple would have received 175,000 NIS, whereas the statutory formula granted them more than two and a half times that amount, with the grace period deemed invalid for delayed handovers.