Summary
- Trigger: compensation is due if the apartment is not handed over one month after the date set in the contract (art. 5א(א) of the 1973 law).
- Scale: 1 rent per month for months 1 to 4 of delay, 1.25 rent for months 5 to 10, 1.5 rent from the 11th month.
- Basis of calculation: the rent of a comparable apartment in size and location, paid at the end of each month.
- Amount due: the higher of the statutory compensation and the compensation provided in the contract.
- No proof required: the buyer does not have to show any loss.
- Exceptions: a delay caused solely by the buyer, or force majeure within the meaning of article 18(א) of the Contracts (Remedies) Law of 1970.
- Scope: the scale applies to contracts signed after amendment no. 9 came into force; for earlier contracts, refer to a lawyer.
1. The Starting Point: One Month After the Contractual Date
The Sale (Apartments) Law of 1973 — חוק המכר (דירות), תשל"ג-1973 (Chuk HaMecher Dirot) — does not treat delay as mere commercial negligence. It provides for automatic compensation, separate from anything the contract may provide.
The trigger is precise. Compensation is due if the apartment is not handed over one month after the date fixed in the contract (art. 5א(א)). Once that period has passed, the statutory scale applies.
The contractual date remains the reference, and it is the one to check before claiming. The calculation of compensation, month by month, is done with your lawyer.
2. The Statutory Scale, Month by Month
The scale is set by article 5א(א) of the 1973 law. It increases with the length of the delay.
| Period of delay | Monthly compensation |
|---|---|
| Months 1 to 4 | 1 times the rent of a comparable apartment |
| Months 5 to 10 | 1.25 times that rent |
| From the 11th month | 1.5 times that rent |
The mechanism is cumulative, month by month: each month of delay is compensated at the rate of the relevant bracket. The precise calculation is done with your lawyer.
There is a simple logic to this scale. The longer the delay lasts, the more likely the buyer is to need a replacement home, and the more the compensation must cover that cost.
3. On What Basis Is the Rent Calculated?
The basis of calculation is not the rent you pay today, nor the one you hope for. It is the rent of a comparable apartment, in size and location, paid at the end of each month (art. 5א(ב)).
That reference therefore implies a comparison. A two-room flat in Netanya is not comparable to a four-room flat in Tel Aviv. Size and location both come into play.
In practice, two questions arise. Which market rent should be taken for an equivalent apartment? And how should that amount be documented? An Israeli lawyer can say what will be accepted in your file.
4. Law or Contract: The Higher Amount
The contract may provide its own delay clause. The law does not set it aside: the buyer is entitled to the higher of the statutory compensation and the contractual one. And the buyer does not have to prove any loss.
This rule protects against clauses that are too low. A developer cannot insert a token penalty to neutralise the statutory scale. If the contract provides more, the buyer relies on the contract. If the contract provides less, the buyer relies on the law.
You should therefore read the delivery clause before signing, and compare it with the scale. This is a legitimate point of negotiation: a clause more favourable than the law is not a gift, it is a commitment the developer accepts.
5. The Only Two Exclusions Provided For
Compensation is not due in two cases. The first is a delay caused solely by the buyer. The second refers to article 18(א) of the Contracts (Remedies) Law of 1970, that is to say force majeure (art. 5א(ג)); its application depends on the facts.
This exclusion applies only if the delay is caused solely by the buyer. Hence the importance of keeping a written record of every exchange and every payment.
6. Amendment No. 9 of 2022: Mind the Contract Date
Amendment no. 9, adopted in 2022, does not apply to contracts signed before it came into force (art. 11(ד)); one law firm cites 07/07/2022 (apm.law). For earlier contracts, you must therefore refer to a lawyer and check which regime applies.
This distinction matters for buyers of projects launched several years ago. Two neighbours may fall under different regimes depending on the date they signed, even if they are buying in the same building.
The rule to remember: the contract date decides. If your contract is old, do not assume that the current regime applies. Have the version of the text applicable to your file verified.
7. Delay and Insolvency: Two Separate Situations
A delay in delivery is not an insolvency. The first gives rise to monthly compensation. The second raises a different question: that of the refund of sums paid.
If the developer fails, the main protection remains the guarantee provided by the 1974 law on the guarantee of purchasers' investments. That guarantee covers the refund of sums paid if the property cannot be transferred.
The two remedies must not be confused. Delay compensation compensates for the wait. The guarantee protects the capital. A solid file mobilises both, and it starts by claiming the guarantee after each payment (statutory deadline of 14 business days).
8. What You Need to Document
- The contractual delivery date, as it appears in the contract and its amendments.
- Every payment, with its date and its voucher, to rule out the possibility of a delay attributable to the buyer.
- Written exchanges with the developer: notices of delay, new dates, reservations.
- The reference rent: comparable listings and contracts in the same area.
- The delay clause in the contract, to compare it with the statutory scale.
A well-kept file does not replace a lawyer, but it makes the calculation verifiable. And a verifiable calculation is settled faster.
9. Frequently Asked Questions
From when is delay compensation due?
When the apartment is not handed over one month after the date set in the contract (art. 5א(א) of the 1973 law). The scale then applies month by month.
How is the amount of compensation calculated?
On the basis of the rent of a comparable apartment in size and location, paid at the end of each month (art. 5א(ב)). The rates are 1 rent for months 1 to 4, 1.25 for months 5 to 10 and 1.5 from the 11th month.
Do I have to prove that the delay causes me a loss?
No. The buyer does not have to show any loss: the statutory compensation is due under the conditions set by the law, and the contract may provide more.
Can the developer invoke a mere construction delay?
Not automatically. The only exclusions provided for are a delay caused solely by the buyer and force majeure within the meaning of article 18(א) of the Contracts (Remedies) Law of 1970 (art. 5א(ג)).
My contract was signed before 2022: which regime applies?
Amendment no. 9 of 2022 does not apply to contracts signed before it came into force, on 07/07/2022 according to one law firm (art. 11(ד)). For an older contract, have an Israeli lawyer verify the applicable regime.
Sources
- Sale (Apartments) Law of 1973, consolidated text on Nevo: https://www.nevo.co.il/law_html/law00/72490.htm
- Contracts (Remedies) Law of 1970, article 18(א) (force majeure), cited by the 1973 law.
- Law on the Guarantee of Purchasers' Investments (תשל"ה-1974), for protection in the event of developer failure.
- Law firm apm.law, note on amendment no. 9 of 2022 and the date of 07/07/2022.
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Disclaimer: this is not legal advice. The calculation of compensation depends on the contract and on the date of signature; consult an Israeli lawyer before making any claim.