Purchasers of an apartment discovered that it has moisture issues and sealing defects that cause leaks to the apartment below it.
The Court found the sellers accountable and ordered them to compensate the purchasers as they knew, or at least should have known, about the defects in the apartment at the time of signing the contract. Under Israeli law, a party to a contract has a duty of disclosure based on the principle of conducting negotiations in good faith. In the case of selling an apartment, there is an increased duty of disclosure towards the purchaser and the seller is required to detail the existing defects in the apartment, the hidden defects, and any other information relevant to the transaction, which the seller knows or should have known, about, as he has access to information about the property. Here, the contract included, at the request of the purchasers, an explicit statement by the sellers referring to the soundness of the apartment and its systems, and the absence of moisture defects in the apartment itself, or from the apartment to the apartments next to it or below it. The person who conducted the negotiations on behalf of the sellers was not aware of the defects, but also did not bother to inquire about it with another manager who was familiar with the work done in the apartment and was well aware of the issue of the moisture defects in it, which caused moisture in the apartment below. This is a defect that the sellers of the apartment should have known about and even though the purchasers explicitly requested to inquire about it, the purchasers were given incorrect information and therefore the purchasers are to be compensated.