In a major victory for apartment buyers, the High Court of Justice has rejected the government’s request to enforce a controversial compromise agreement between the state and construction contractors. The agreement would have linked apartment prices to the construction cost index, potentially resulting in an additional 15 thousand shekels for buyers.
A group of apartment buyers had raised objections to the agreement, arguing that they were not involved in the negotiations and should not be bound by its terms. They were supported by a professional opinion prepared for the Knesset, which confirmed that the agreement was not legally binding on buyers. Despite this, the government attempted to exclude buyers’ representatives from legal proceedings while still insisting that they adhere to the agreement.
High Court Judge Alex Stein dismissed the government’s claims, stating that the agreement did not impose obligations on buyers who were not party to it. He also criticized the government’s efforts to enforce the agreement at the expense of apartment buyers after attempting to prevent their involvement in legal discussions.
As a result of this decision, the government will need to decide whether to compensate contractors 900 million shekels for damages resulting from legislation limiting cost indexation of purchased apartments before transfer. Alternatively, they may try to pass this cost onto buyers, who would then have to pay tens of thousands of shekels more for their apartments.
