A Jerusalem apartment purchase agreed in 2020 between buyer Guy Bernard Farash and seller David Yishai became a complex dispute in the Jerusalem District Court. Both parties faced allegations of breaching the agreed terms. The judgment described in the article stresses the importance of contractual obligations and good faith in property transactions.
Background
Farash agreed to buy the apartment for NIS 4 million. Yishai undertook to deliver it with registration completed and in conformity with the sale plan. The agreement required removal of a mortgage, registration of the apartment as a separate sub-parcel and inclusion of an additional 30 square metres promised to the buyers. At handover, Farash found that registration was incomplete and the mortgage remained registered.
Yishai then announced cancellation, alleging that Farash had failed to make the final payment on time. Farash argued that he was entitled under contract law to postpone payment until the mortgage was removed and registration completed as agreed.
The court found the cancellation invalid
Judge Miriam Ilani ruled for Farash and held that Yishai's cancellation was unlawful. She relied on section 26 of the Contracts (General Part) Law, 5733-1973(opens in a new tab), which the article describes as allowing missing contractual terms to be supplied through custom or economic logic. She interpreted the agreement as requiring Yishai to complete registration and remove the mortgage before Farash's final payment.
Certainty of registration
The judge emphasised accurate registration of property rights at the Land Registry. A discrepancy between an apartment's registered and physical condition is an unusual situation that the seller must resolve, especially where the sale includes extensions not yet formally registered. Delay can expose buyers to third-party rights they do not know about. This justified Farash's demand for removal of the mortgage and updated registration.
Registration obligations and good faith
The decision highlights each party's responsibilities and the duty to act in good faith when exercising a right to cancel. The article states that, although the Sale (Apartments) Law, 5733-1973(opens in a new tab) gives a seller a right to compensate a buyer for delays, that right is limited when the seller caused the delay or breach.
Could the dispute have been avoided?
The judgment illustrates the value of legal guidance, particularly where contractual conditions require careful examination. The Sale Law requires transparency and fulfilment of essential transaction conditions. Professional guidance, from negotiations through delivery and registration in the buyer's name, can prevent legal problems and protect buyers' rights.
For questions or advice, contact our office. Advocate Haim Shamli specialises in property transactions, including effective tax planning. You can also read our articles.
The information on this page is general information and is not legal advice.