The Israel Land Authority did not act to ensure that an entrepreneur who obligated by the lease and development contract to build protected housing for the elderly for over 55 years old indeed stand up to its obligations.
The Court accepted the claim and ordered the Israel Land Authority to enforce the leasing agreements and ensure that the purpose of the lease is maintained. An undertaking made by a person in a contract for the benefit of a person who is not a party to the contract (a third party) gives the third party the right to demand the enforcement of such undertaking, if the contract implies an intention to grant it such right. Here, purchasers of apartments in a protected housing complex for the elderly found that the mix of tenants deviates substantially from the purpose of the allocation as the developer had covenanted. In general, development and leasing agreements are not considered agreements for the benefit of a third party and purchasers, who are not a party to such contracts, may not demand the enforcement of undertakings such as: meeting deadlines, building according to building permits, etc. However, here, the developer did not preserve the purpose of the complex, as a protected housing complex when this designation, is not "just" a regular provision or commitment in the development and lease agreements, but is the material purpose of the allocation of the complex which is in the essence of the contract. This commitment is also for the benefit of a "third party" which is the public, which is also anyone who will purchase an apartment in the complex. Therefore, the Israel Land Authority was forced not approve sales/rental agreements for apartments, nor approve the transfer of rights in the apartments to others, nor sign lease agreements with purchasers if they do not meet the age limit.