Sold agricultural land at 6.7 times the cost: Court orders 1.4 million shekels in compensation
Judge Yehoshua Geifman ruled that buyers in Pardes Hanna-Karkur were misled into believing residential construction was approved. Nearly 12 years later, the land remains agricultural, and compensation is linked to the original purchase date.
In 2014-2015, private buyers paid approximately 735,000 shekels per dunam for agricultural land in Pardes Hanna-Karkur, even though the marketing company itself had contracted to purchase the land for only 110,000 shekels per dunam. The Tel Aviv District Court has ordered A.A.A. Group Sia Project Management and two of its directors to pay six buyer families 1.415 million shekels, plus linkage and interest. The court determined that the transactions were signed based on negligent misrepresentation regarding the land's development prospects.
Senior Judge Yehoshua Geifman detailed the deal's structure: the company was established in 2014 specifically for this project, signed option agreements for an 11,450 sqm plot, and resold the options to buyers at nearly seven times the cost. Sales manager Avraham (Avi) Ben Aruya confirmed that the company existed solely for this single project.
Marketing efforts relied on advertisements in the Haredi press and brochures promising a "rare investment" and land "in areas of the national master plan for housing." Buyers, including educators, a rabbi, and social workers, testified that they were persuaded by claims of short-term returns and imminent rezoning.
The Planning Reality
The planning reality, however, was starkly different. As early as 2012, the District Committee had decided the plot would remain agricultural. Court appraiser Giora Engelhart confirmed that in 2014-2015, the chances of rezoning were virtually zero. Nearly 12 years later, the land remains agricultural.
Judge Geifman ruled that the company and its directors provided misleading data and failed to disclose material information. He rejected the defendants' reliance on exemption clauses, citing the significant power imbalance between real estate professionals and unrepresented buyers.
Compensation was awarded based on "reliance damages"—the difference between the purchase price and the 2022 market value. Claims against attorney Ron Elishiv and shareholder Tsipora Ben Aruya were dismissed due to lack of evidence regarding their involvement in the deception. The issue of collection remains uncertain, as Ben Aruya stated the company has ceased operations and holds no assets.
