The Trial Court's Judgment
- On July 2, 2023, the trial court issued a judgment, in which it was determined that the agreement was legally cancelled by the seller (hereinafter: the judgment). First, the court rejected most of the arguments raised by the buyers, as follows: First, it was determined that the buyers did not prove that the bank required them to present Form 4 as a condition for receiving a mortgage. In fact, this is a matter of fact, about which the bank's representatives should have shed light, but they did not give testimony in the proceeding. Second, the argument that the seller made a false representation regarding the planning status of the apartment was rejected. This was done, inter alia, because the buyers' counsel conducted independent examinations with the council on this matter; the agreement clearly stated that the parties had examined the condition of the apartment physically, legally and planning, and had waived any claim in this regard; and the purchasers knew of the deviation in the existing construction in the apartment at least at a certain stage, but did nothing following this discovery. Third, the claim of changing the agreement was rejected, and it was explained that this argument was based on delays in trivial matters close to the conclusion of the agreement - and it is not possible to conclude on this basis that the agreement was indeed different. Fourth, it was ruled that the purchasers did not meet the evidentiary burden of proving the existence of a general practice for determining longer periods of time than those set out in the contracts, when more than a year has elapsed between the date of the conclusion and the date of taking out the mortgage. Moreover, the buyers did not show that a period of 10 days is not an acceptable period of time to receive a mortgage in these cases - nor did they concretely need more than 10 business days in the first place.
Most of the judgment was devoted to the hearing of the claim of bad faith. In this context, the trial court discussed at length the sequence of events that preceded the filing of the claims that are the subject of this appeal, the main points of which were described above. Among other things, it was emphasized that the purchasers contacted the bank only nearly two business days after Form 4 was served on them; did not contact the bank documented for about two weeks afterwards; It was only on October 25, 2021 that they contacted the bank, when this request indicated that no new mortgage was required, but only an update to the offer that was given to them at the time. It was also noted that prior to the issuance of the cancellation notice, the purchasers sent three emails to the bank, but they do not indicate an attempt to expedite the receipt of the mortgage, whereas an urgent request in this context was made only at the time the cancellation notice was sent. On the other hand, it was held that the argument that the seller ambushed the first opportunity to cancel the agreement is inconsistent with the events that occurred after the cancellation notice, especially in light of his agreement in principle to extend the date for the payment of the balance of the consideration by a few days. Not only that, but the buyers were informed in advance that Form 4 would be received late; They did not contact the seller at the time he was presented to them; they refused the compromise offer offered by him; They did not transfer to him the part of the balance of the consideration they planned to pay from the equity, even though they knew that they were in a state of fundamental breach, and even though they had sold another apartment that they owned and they were left with a significant sum of money; On top of that, they gave the seller an ultimatum to accept their final compromise offer. On the basis of these reasons, and since the insistence of one of the parties to the engagement on the fulfillment of an explicit obligation set forth in the contract, and which was agreed that its breach is a fundamental breach, cannot be considered, in itself, an act done in bad faith, it was determined that the cancellation of the agreement did not suffer from bad faith on the part of the seller.
- Against this background, the trial court ruled that the agreement was lawfully cancelled. As such, the court moved to examine the parties' claims regarding the compensation to which they are entitled. In this context, it was determined that most of the claims raised by the purchasers should not be discussed, when the agreement was lawfully cancelled, and in any event, no evidentiary basis was provided to support them. On the other hand, it was determined that both parties are entitled to receive agreed compensation for a fundamental breach of the agreement (delay in receiving Form 4 on the one hand and failure to pay the balance of the consideration on the other), with these amounts being offset by each other. The trial court further ruled that from the date of cancellation of the agreement until the date of the actual eviction, the purchasers are required to pay the sum of ILS 12,000 per month for proper use fees for the apartment, plus linkage and interest differentials starting from the middle of the said period.
In light of the above, the court ordered the evacuation of the apartment and the return of the consideration paid, plus linkage differences and interest, from which the funds that the buyers must pay will be deducted to the seller for the proper usage fee. Since the buyers live in the apartment with their children, the court set the deadline for its eviction to be October 9, 2023 (i.e., about three months after the judgment was rendered).