Afterwards, I will move on to present the outline of the decision that is about to come.
A concise preliminary look at the purchasing groups and the regulatory gaps in their regulation
- The plaintiffs in question joined a purchasing group. Like many others. Studies conducted show that between the years 2009-2016, about one-tenth of all construction starts in Israel were the product of the activities of such groups (see the background, which appears in the Memorandum of the Purchasing Groups Law, 5778-2018).
The reason for the relative popularity of this construction channel lies in its chance of cost savings. Many people's imagination has been ignited by the possibility of becoming an apartment owner at a lower price compared to the traditional channel of buying an apartment from a contractor. This was also the case before us. Ms. Or operated an effective marketing mechanism, and the group members were impressed by the considerable potential to own an apartment in the center of Ramat Gan at a cost significantly lower than the market price. Ms. Or's name preceded her at the time as one of the most prominent figures in the construction market in Israel, and the various plaintiffs sought to take advantage of the opportunity and feared losing it.
Still, alongside the chance are the risks. And these are expressed on several levels.
First, the protections that the law provides to the right of apartment buyers from contractors do not, ordinarily, stand on the right of the members of the purchasing groups. "The unique laws that apply to apartment sellers and their concern for the protection of the buyer - the Sale (Apartments) Law, 5733-1973, and the Sale (Apartments) Law (Securing Investments of Apartment Buyers), 5735-1974, as a rule, do not apply to the purchasing groups, since this is not the purchase of an apartment" (ibid.).
In addition, in most cases, the group members become a kind of "entrepreneur", initiating a construction project. They are usually attracted to the various projects following the work of the group's organizers, who identify the business opportunity for their establishment. And when they join the path, they take on the risks that all the developers in the real estate market take. No one commits to them "that the project will be realized, what will be its final cost, and what will be its completion date, if at all" (ibid.).