Buying a New Apartment in Israel – The Seller’s Disclosure Duty

Buying a New Apartment in Israel

A buyer of a new apartment in Israel which have not been built or in the process of building cannot see the apartment itself or its surroundings. It is the duty of the seller, whether a contracting company or a real estate developer, to ensure that the information the buyer receives contains all the details relevant to the purchase in a clear and accessible language, so that the buyer can make an informed decision about whether to purchase the apartment.

Israeli courts have already ruled that pre-contractual presentations made by a contractor in the framework of negotiations for the purchase of an apartment that is being bought “on paper” are part of the contract itself. This is due to the unique characteristics of such contracts, which are characterized by unequal power relations and significant information gaps between the contractor and the ordinary person who comes to buy an apartment from them.

The Case of Netta Mor

In July 2014, Netta Mor purchased an off-plan apartment in a luxury project in the Tel Aviv neighborhood of Bavli for approximately NIS 5 million. The apartment was designed with glass exterior walls facing the landscape. However, four years later, during a tour of the construction site, Netta discovered that the developer had built another building that would block the view from the south side of her apartment. Netta contacted the developer company to demand compensation, but the parties were unable to reach an agreement. Netta then filed a lawsuit in the Tel Aviv District Court.

The District Court dismissed Neta’s lawsuit, partly because she was represented by a lawyer when she signed the purchase contract. The court reasoned that the lawyer should have advised Neta about the possibility for view obstructions.

Netta Mor did not give up and appealed the District Court’s decision to the Israeli Supreme Court. The Supreme Court accepted her appeal and overturned the District Court’s decision.

The Israeli Supreme Court ruled that the blocking of the view from Netta’s apartment by a building that the developer-seller built himself amounted to a violation of the increased duty of disclosure applicable to the developer, especially when the building blocking the view was built by the developer himself.

The court made it clear in its decision that as part of the negotiations that preceded the signing of the sales contract, the developer had a duty to disclose to Neta the outline of the building permit application he had submitted for the construction of the building that blocked the view.

(Civil Appeal 2274/21 Netta Mor v. Elad Israel Residency LTD)