...
In the present case, there is no obligation on the part of the sellers to complete the construction, and the term 'seller' should not be given a broad meaning beyond its clear language. What is more, when we are dealing with a case in which a broad meaning will cause the tax burden to increase and not to alleviate it.
It does not matter whether the undertaking is 'of' the seller [as required by the definition of the term 'building' in section 9(c) ] or 'on the seller's side '. The important word is that it is the seller who must undertake to complete the construction in order for it to be considered the purchase of a residential apartment.
There is a difference between purchasing an apartment on paper from a builder contractor who is responsible for completing the construction and purchasing a complete set of contracts (including a contract with an executing contractor), both in the application of the Apartment Sale Law, when the executing contractor does not meet the schedule or in the event of bankruptcy, in which case the buyers will not be able to sue the sellers because they are 'out of the picture' and have no obligations with the buyers, and more."
(from paragraphs 63 and 67 of the judgment).
CPA Friedman reached the aforementioned conclusion: "Although the buyer's intention is that at the end of the day he will have a residential apartment... ":
"In our case, there is no doubt that the economic nature of the system of agreements leads to the conclusion that we are dealing with the purchase of a residential apartment 'on paper' ... The appellants entered into a system of agreements in which from an economic point of view they actually purchased a residential apartment 'on paper' and that they have an undertaking by the executing contractor to complete the construction, but not by the sellers."
(From paragraphs 52 and 64 of the judgment)
I joined CPA Zvi Friedman's conclusion on this issue and added:
"Admittedly, it can be assumed that the appellants' expectation was and still is that the construction would be completed as planned, and it is evident that this expectation motivated the appellants to pay the agreed consideration to the sellers. However, that expectation does not turn the assignment of rights and obligations from the sellers to the appellants into an undertaking on the part of the sellers (who left the project) for the completion of the construction. Nor was it claimed that the sellers remained guarantors to the appellants for the fulfillment of the obligations of the executing contractor. " (paragraph 2 of my opinion).