Lessees of an apartment contended the existence of severe defects in the property (including a malfunctioning sewage system and flooding) and consequently completely ceased rent payments as a means to "educate" the lessor. The lessor filed an action for possession (eviction).
The Court granted the lessor's claim and held that the lessees, who had the ability to affect the repairs themselves and execute a reasonable set-off, committed a fundamental breach of the lease agreement by entirely stopping the rent payments. Section 9 of the Israeli Lease and Loan Law grants a lessee the right to repair a defect not remedied by the lessor and to set-off the repair costs against the rent payments in order to incentivize the lessor to fix defects. This will be by way of a set-off from an ongoing payment, and does not confer the right to complete cessation of rent payments. Conversely, where the defects are so severe as to render the property uninhabitable (unfit for use), the standard remedy is termination of the agreement and not a complete suspension of payments while maintaining possession of the property. In this case, instead of pursuing the remedies of repairing the defects and set-off or terminating the agreement, the lessees chose to use the suspension of payment as a pressure tactic that exceeded the contractual relationship. By doing so, the lessees committed a fundamental breach of the agreement and forfeited their right to continued possession of the leased property.