00As a rule, in accordance with section 62 of the Real Estate Law, the consent of all the apartment owners in the condominium is required in order to demolish the condominium and allow the construction of a new condominium in its place. The demand for this absolute majority raised the possibility of a market failure in which a single apartment owner would make improper use of the veto power in his possession, in order to thwart a desirable Pinui-Binui transaction (see the case of the Institute for Reform in paragraph 3 and the Schwartzberger case in paragraph 14). In order to deal with this possible failure, the Pinui-Binui Law was enacted, in which it was determined that under the conditions set out in the law - the majority interested in an evacuation-reconstruction transaction - could also impose this transaction on a tenant who refuses the transaction for unreasonable reasons (a similar mechanism was also established in the Real Estate Law (Reinforcement of Condominiums against Earthquakes), 5768-2008 (hereinafter: the "Reinforcement Law"). Thus, in section 2 of the Pinui-Binui Law, it was determined that:
If a privileged majority of the apartment owners in the Pinui & Binui cluster agrees to enter into an evacuation & construction transaction, and the court finds that an apartment owner in that cluster unreasonably refuses to transfer his rights for the purpose of executing the transaction or conditions his consent to do so on unreasonable conditions (in this law - an apartment owner refuses), the court may act in one of the following:
(1) To determine that the refusing apartment owner is liable for damages to the other apartment owners in the same group who agree to the transaction, due to the damage caused to them as a result of the non-execution of the transaction;
(2) To approve the execution of the transaction and to appoint a lawyer or accountant, who is not an apartment owner in the cluster, who will be authorized, in accordance with the court's instructions, to enter into the transaction on behalf of the owner of the apartment who refuses."