Legal Updates

Waivers which signature upon was required as a condition for receiving partial compensation due to the contractor’s delay in handing over an apartment are not valid

June 30, 2021

A contractor was late in tendering possession of apartments and conditioned the payment of partial compensation to the purchasers and the delivery of the apartment on signing a waiver in which the purchasers confirmed that they have no more claims against the contractor in connection with the delay.

The Court held that the waivers are void and the purchasers of the apartments are entitled to the balance of the compensation under law. Purchasing an apartment is usually the most expensive and significant transaction one makes during his life and there is a significant power gap between the experienced contractor and the purchaser which requires special protection for the purchaser. Israeli law stipulates that more than sixty days delay in tendering the apartment from the date stipulated in the contract grants the purchaser a right to compensation, without proof of damage, in an amount of not less than 1.5 times the rent of an equivalent apartment up to eight months and then to 1.25 times the rent of an equivalent apartment. Here, the contractor was late in delivering the apartments to the purchasers in a manner that caused them personal and financial distress. 26 purchasers were pushed into a corner and required to sign a waiver upon delivery of the apartment which was also a condition for receiving only partial compensation that does not reflect the compensation under law. The waivers do not reflect voluntary consent and signing them was without real choice and therefore are void. In any case, even had there been a consent, the waivers are not valid both because the law prevails and because it is an illegal oppressive condition. Therefore, the purchasers are entitled to compensation under law.