A lessee unilaterally offset the cost of installing a central air conditioning system from its rent, contrary to the provisions of the lease agreement that prohibits this. As a result, the lessee was demanded to vacate the leased property.
The Court accepted the eviction claim and held that the lessee breached the lease agreement and must evict the leased property. Israeli law gives the lessee the right to fix a defect in the leased property and to demand reimbursement of its expenses or to reduce the rent according to the reduction in the rental value as long as the lessor has not corrected the defect or the discrepancy within a reasonable time from the date it received a demand to do so from the lessee. In an agreement to lease a commercial property, these rules can be amended explicitly or implicitly. Here, the lease agreement was for a commercial property and forbade the lessee from offsetting any amount from rent and even stated that doing so is a fundamental breach. Despite this, the lessee offset tens of thousands of ILS without making a prior request to the lessor to repair the air conditioning system and without giving advance warning to the lessor of its intention to deduct this significant amount from the rent. The purpose of the offset prohibition is that arguments and disputes will not be a reason for non-payment of the rent and expresses the parties' desire for the principle: "first pay, then argue". The lessee breached this basic condition and did not even bother to correct its omissions despite opportunities that were given to it and therefore must vacate the leased property.