A lessee of a property failed to deliver upcoming rent payments to the lessor claiming that there were deficiencies (floods and moisture) in the leasehold which caused damage and may cause future damage that is likely to increase, because of alleged difficulty in leasing the leasehold to a sublessee in the future. The lessor wished to terminate the agreement.
The Court held, that the Israeli rental law establishes a mechanism to repair deficiencies in the leasehold. For example, if the landlord does not act to repair a defect within a reasonable time after receiving a notice from the lessee, the lessee may then repair the deficiencies and demand reimbursement but must notify the lessor by a written prior notice. Mutual due charges may be set-off but future or conditional obligations may not be offset.
In the present case, the lessee did not act according to the law, repaired the deficiencies and argued only that it is exempt from paying future rent until the repair of the alleged damage will be done. However, the lessee failed to prove in Court damage affecting the actual ability to use the leasehold. Also, damage in the form of apprehension of future inability to sublease the property is a damage that has not yet solidified and therefore may not be offset.