Civil Case (Tel Aviv) 72240-05-24 Shalev Elhaik v. Prosper Ben Shitrit - part 3

0 Discussion and Decision

1. The question of the breach and the interpretation of clause 9 of the lease agreement

1. The main question in this proceeding is whether the defendants were entitled to demand the eviction of the leased property after the end of the first lease year, and how clause 9 of the agreement should be interpreted.  Section 9 of the lease agreement states that "notwithstanding the aforesaid, if the landlords wish to sell the leased property, the tenant will not have the option to extend the lease period."
2. I do not accept the defendants' argument that any subjective "desire", which is not based on any practical attempt to sell the leased property, can constitute a thwarting of the option terms existing in the agreement.  Such an interpretation constitutes a lack of good faith that cannot be tolerated.
3. The basic conventions in the law are that any right deriving from a lease, including the right to cancel or terminate the contractual relationship, must be exercised in an acceptable manner and in good faith, both by virtue of section 39 of the Contracts (General Part) Law, 5733-1973, and by virtue of section 4 of the Rent and Loan Law, 5731-1971 (hereinafter: the "Rent and Loan Law").  In the absence of a genuine intention to sell, and since no real action has been taken to realize this ground, the exercise of the right of cancellation deviates from the purpose for which it was granted, and therefore constitutes an abuse of the contractual right and contradicts the duty of fairness and honesty imposed on the parties.
4. In this case, the defendant testified during the pre-trial period that the defendants had the idea of moving to sheltered housing, but as it became clear in the evidentiary proceeding, the defendants have been living in the same residential apartment located in Azori Chen, and that the rented property that is the subject of this proceeding is an investment apartment that is rented to this day.  During the hearing and also in the pre-trial it emerged that in practice the defendants did not take any real action that could testify to their intention to sell the apartment.  In addition, the plaintiffs rented the apartment to new tenants about three months from the date of the eviction of the apartment by the plaintiffs, at a price higher than the rental price the plaintiffs would have paid if they had continued to live in the apartment.
5. Therefore, I accept the plaintiffs' argument that not only is it improper to interpret the agreement as giving the defendants the option only to say that they intend to sell without really intending to do so, but in this case there was also no real desire on the part of the defendants to sell.
6. Hence, I determine that the notice of termination of the agreement sent by defendants 1 and 2 was unlawful.  As a result, defendants 1 and 2 are the ones who breached the agreement.

1. Requirement to Pay Brokerage Fees
2. There is no dispute that on June 3, 2021, defendant 3 signed a brokerage agreement with the plaintiffs and charged them a brokerage fee of ILS 10,000. There is also no dispute that defendant 3 is the daughter of defendants 1 and 2 and that she received their consent and acted on their behalf, as the owners of the property.
3. Defendant 3 testified that she worked in the real estate field for 13 years and that she has an active brokerage license, but for the past eight years her main occupation has been a fitness trainer.
4. Defendant 3 served as an intermediary in the apartment rental transaction that is the subject of the lawsuit. The plaintiffs claim that she presented herself as a real estate agent and handled the rental of the apartment.  Defendant 3 also demanded and received a brokerage fee of ILS 10,000 from the plaintiffs.

1. The plaintiffs claim that defendant 3 did not disclose her family connection to the landlords at the time of signing the brokerage form, and that this was revealed only after the plaintiff signed the brokerage form and after they found the leased property suitable for their needs.  Following their arguments on this issue, the plaintiffs filed a complaint against defendant 3 with the Real Estate Agents Association alleging a violation of the Realtors Law, but this was rejected.  On the other hand, the defendants claim that defendant 3 clarified the family relationship in the first telephone conversation between the parties on June 1, 2021, and also did so in writing by correspondence with the plaintiffs' attorney on June 3, 2021 (the date of signing the brokerage form), as required by the Realtors Law.
2. The main question that must be answered in this issue is whether defendant 3 violated section 10 of the Real Estate Brokers Law, 5756-1996 (hereinafter: "the Realtors Law"), according to which a real estate broker will not broker in a real estate transaction if he has a personal interest in the real estate or the transaction, unless he disclosed to his client his personal interest as aforesaid and received the client's written consent to do so.
3. At the outset, I will note that I am not comfortable with the conduct of defendant 3 in the context of her role as a mediator in the case before us.  A realtor who charges a brokerage fee from his client owes him a duty of trust, fairness and increased disclosure.  In the present case, it is clear that it is not desirable that the brokerage transaction was made when defendant 3 was, prima facie, in a material conflict of interest.  Moreover, there is no dispute that defendant 3 has no longer been engaged in real estate brokerage for many years, and that the invoice that was given to the plaintiffs (if indeed it was given) was spent in the course of her occupation as a sports coach - and not as a realtor.
4. However, I am of the opinion that in our case, the written requirement was indeed fulfilled in accordance with what is stated in section 10 of the Realtors Law, and this is in light of the correspondence between the plaintiffs' attorney and the defendant dated June 3, 2021.  In the framework of this correspondence, defendant 3 wrote the following message to the plaintiffs' attorney:

"Hi Ofer, indeed, as I told them when we met, and the ad from which they rang is also an advertisement for brokerage, I explained at that moment that although it is my parents' apartment, I am brokering the deal.  I won't be able to make a discount and of course they'll pay an invoice and if you want it to be in your name so you can be credited, then of course it's fun."