By Yaacov Epstein - Israel Attorney - Epstein Law

05 November, 2023

New Construction Liability During Wartime

Courtesy Of Yaacov Epstein, Senior Attorney at Epstein Law and Company. 

“What if a rocket hits the apartment that my Contractor is in the middle of building?”
“My Contractor said he’ll be delayed because of the #Israelwar–is that a Force Majeure that would justify it?”
“Who will compensate me if a rocket hits my apartment?”
Questions like these have been pouring into my office from those with investments in Israel, understandably so.
Below are my general responses to the above concerns and other related points. Naturally, the exact applications can vary based on the specific case, so each person should do their due diligence regarding their own investment and reach out to a competent Israeli lawyer.
𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐨𝐫’𝐬 𝐑𝐞𝐬𝐩𝐨𝐧𝐬𝐢𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬
When purchasing from a Contractor, the property is not legally owned by the Buyer until the final payment has been made and the Buyer has received possession of the property.
Therefore, for any damages that occur to the property, whether from an act of terror or any other cause:
● Prior to your receiving possession–the Contractor is fully responsible for repair & restoration.
● After you have received possession–the Contractor is fully exempt.
What this key turning point means for the Contractor is that he may wish to advance the delivery of possession. Be aware: the Contractor can only obligate you to receive possession ahead of schedule when both these conditions are met:
a) it is in liveable condition, with basic amenities in working order
b) this option was stated in your contract
𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐂𝐨𝐯𝐞𝐫𝐚𝐠𝐞
What this key turning point means for you, the Buyer, is that you’ll want to have a Home Insurance plan set up from when possession is received.
Now, while Home Insurance is definitely recommended, the standard plans generally don’t cover damages from terror attacks.
There are 2 points though that can be helpful to know on this front:
1) Some plans do exist with extended coverage options that would include such circumstances
2) The Israeli government reimburses homeowners for damage caused by rockets or terror attacks (although the reimbursement is not guaranteed to fully cover the damage costs)
𝐅𝐨𝐫𝐜𝐞 𝐌𝐚𝐣𝐞𝐮𝐫𝐞
In cases where the #Israelwar causes a delay of construction, whether due to lack of workers or other related factors, this may be considered a ‘Force Majeure’, i.e. out of the control/responsibility of the Contractor.
That would mean that any consequential delay in delivery of possession would not obligate the Contractor to pay the penalty as per the Sale Law, and yet, notwithstanding, all payments and obligations of the Buyer may still need to be completed as set in the contract, regardless of the delays.
The Israeli Government and Courts will eventually determine whether or not the current situation is considered a Force Majeure. We expect them to announce their opinions/decisions on this over the next few months/years and we’ll be providing updates.

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