Late delivery of an apartment by a contractor: compensation under section 5A of the Sale (Apartments) Law

Service page: Consumer claims and class actions lawyer.

Compensation for late delivery of an apartment: what does section 5A of the Sale (Apartments) Law provide?

The Sale (Apartments) Law, 5733-1973 (חוק המכר (דירות), התשל״ג-1973) is the law that regulates the relationship between the seller of a new apartment (a contractor or developer) and the buyer. Section 5A of the Law, added in 2011 (Amendment No. 5) and substantially changed by Amendment No. 9 of 2022, sets fixed monthly compensation for late delivery, without proof of damage. The buyer does not need to show that they rented an alternative apartment or had expenses; the delay itself creates the entitlement.

Under the wording that applies to contracts made from 7 July 2022, if the seller did not make the apartment available to the buyer after a month has passed from the contractual date, the buyer is entitled to compensation for each month or part of a month, from the end of the first month until actual delivery, on three levels:

• From the end of the first month to the end of the fourth month: an amount equal to the rent of an apartment of similar size and location.
• From the fifth month to the end of the tenth month: the rent multiplied by 1.25.
• From the 11th month on: the rent multiplied by 1.5.

If the contract sets higher liquidated damages for delay, the buyer is entitled to the higher of the two. Section 5A(b) adds that the compensation is paid at the end of each month for that month, meaning the contractor is supposed to pay on an ongoing basis, and not only at the end of the project. On the difference between liquidated damages and statutory compensation, see also Liquidated damages in Israel.

A numerical example: a 12-month delay

Suppose the rent of an apartment of similar size and location is NIS 6,000 a month (a figure that must be proved, as explained below), and the apartment was delivered 12 months after the contractual date.

The table shows two things: compensation under the new contracts is lower for short and medium delays, but rises as the delay grows longer; and on both tracks the amount approaches and exceeds the actual rent, which is why contractors fight over the exemption arguments and the amount of the rent.

When is the contractor exempt? Only for frustration under section 18

Section 18(a) of the Contracts (Remedies for Breach of Contract) Law provides that a breach will not be grounds for enforcement or for damages when it results from circumstances that the party in breach, when the contract was made, did not know of and should not have known of, or did not foresee and should not have foreseen, and could not have prevented, and performing the contract in those circumstances is impossible or fundamentally different from what was agreed. The conditions are cumulative, and the burden of proving them is on the contractor. The courts interpret the doctrine narrowly; more in the article on frustration of contract.

War and military operations

The guiding judgment on frustration of a contract because of war, and on whether the war was foreseeable, is CA 6328/97 Regev v. Ministry of Defense (Supreme Court, 23 November 2000). In any case, the exemption applies only to a delay “caused by circumstances” as described in section 18(a) of the Contracts (Remedies) Law (section 5A(c)(2) of the Sale (Apartments) Law), so the contractor must prove a causal link between the war or the military operation and the delay. Such an examination is made against the timetable in the contract and the notices that were sent, so it is worth contacting a commercial contracts lawyer with the full documentation.

The Swords of Iron War did not change the rule. On 22 April 2025, the Supreme Court summarily dismissed a petition by a construction company (HCJ 27036-04-25) that asked for the war to be declared force majeure, and held that whether the war supports a frustration argument is for the court hearing each claim to decide according to its circumstances. On 29 July 2025, the petition of the Israel Builders Association against the government was also dismissed, and the court held, in essence, that it is not its role to tell the state how to form a policy on the matter and how to implement it.

COVID-19, weather and subcontractors

The COVID-19 pandemic is not a sweeping exemption either: like any other circumstance, it exempts only if the contractor proves that the specific delay was caused by it and that the other conditions in section 18(a) are met (section 5A(c)(2) of the Sale (Apartments) Law). Winter rain is a foreseeable circumstance that a contractor must take into account, so it does not meet the conditions of section 18(a) (section 5A(c)(2) of the Sale (Apartments) Law). And the collapse of a performing contractor or a supplier is an internal risk of managing the project, a circumstance that the developer can foresee and protect itself against, so it is very hard to see it as “circumstances that it should not have foreseen”.

A waiver as a condition for delivery is void

Section 7A(a) of the Law provides: “The provisions of this Law may not be contracted out of, except in favor of the buyer or the sub-buyer.” Amendment No. 9 extended section 7A(b), which until then applied only to a waiver relating to non-conformity, so that in contracts made from 7 July 2022 a waiver, including in writing, of rights relating to late delivery under section 5A (or to non-conformity), which is a condition for transferring rights, carrying out repairs or making the apartment available to the buyer, is void. The Sale Law Supervisor at the Ministry of Construction and Housing also made clear, in a directive of 3 April 2024, that a demand to waive rights as a condition for delivering an apartment contradicts the law and has no effect.

The Shemesh rule: a postponement clause without a new date is void

The guiding judgment is the application for leave to appeal LCA 6605/15 Ilana Shemesh v. Space Bniya VeYazamut Ltd. (Supreme Court, Justice D. Barak-Erez, 21 February 2016). The contract there allowed the contractor to postpone delivery because of changes the buyers ordered, for the time it took to carry them out and by at least 60 days. In LCA 6605/15 the Supreme Court distinguished between two types of clauses:

• A clause that sets a new, specific delivery date, or a fixed period by which the date is postponed, because of changes: allowed.
• A clause that allows an open-ended postponement without a clear new date: this is an exemption clause, and it cannot be given effect, because it contradicts the mandatory provision in section 5A of the Sale (Apartments) Law. Section 7A(a) provides that the provisions of the Law may not be contracted out of except in favor of the buyer.

This distinction cuts both ways. The practical conclusion: before signing a “change appendix”, check how many days of postponement it adds and whether they are reasonable in relation to the work ordered. Sweeping clauses of this kind are also examined under the law on unfair terms in a standard contract.

How do you prove the amount of the rent?

The compensation does not require proof of damage, but it does require proof of the basis for the calculation: the rent of an apartment of similar size and location. In practice, an appraiser’s opinion is the safe way. Ads from real estate websites or judgments about other apartments may not be enough, and without such an opinion even a justified claim may fail on the question of the amount.

What changed in Amendment No. 9 (2022)?

The Sale (Apartments) Law (Amendment No. 9), 5782-2022 was published in Sefer HaHukim on 30 June 2022 and came into force seven days later, on 7 July 2022. It applies to contracts of sale made from that day on; earlier contracts remain subject to the old wording.

• The grace period: 60 days in the old wording; one month in the new wording.
• The structure of the compensation: in the old wording, once the 60 days had passed, compensation was paid retroactively from the contractual date: ×1.5 the rent for the first eight months and ×1.25 from the ninth month. In the new wording, compensation starts from the end of the first month, without retroactivity, in rising levels (1 → 1.25 → 1.5).
• The exemption: the old wording allowed the parties to agree that the compensation would not apply to a delay “caused as a result of circumstances that are not under the seller’s control and the risk of whose occurrence and consequences is not imposed on the seller”, a loophole that contractors used through broad “force majeure” clauses. In the new wording (section 5A(c)), only two exemptions remain: a delay caused by an act or omission of the buyer alone, and a delay that results from circumstances of frustration as defined in section 18(a) of the Contracts (Remedies for Breach of Contract) Law, 5731-1970.
• Waiver: section 7A(b), which until then voided only a waiver relating to non-conformity, was extended to also cover a waiver of the delay compensation that is demanded as a condition for delivering the apartment (see below).

More guides on consumer rights are gathered in the consumer information hub, and the contractual aspects in the contracts information hub. Section 5A adds to the general protections of the Consumer Protection Law, but it applies by virtue of the Sale (Apartments) Law only.

Frequently asked questions

Do you have to prove damage to get compensation for late delivery?

No. Section 5A of the Sale (Apartments) Law sets compensation “without proof of damage”. You need to prove only the delay itself and the amount of the rent of an apartment of similar size and location, preferably with an appraiser’s opinion.

I signed a waiver to get the keys: have I lost the compensation?

Under section 7A(b) of the Law, in contracts made from 7 July 2022, a waiver of the delay compensation that was demanded as a condition for delivering the apartment is void. It is important to document the circumstances of the signing and to get advice before giving up a claim.

Does the Swords of Iron War release the contractor from paying compensation?

Not automatically. In contracts made from 7 July 2022, the fixed compensation does not apply to a delay caused by circumstances as described in section 18(a) of the Contracts (Remedies) Law, when the other conditions in that section are met (section 5A(c)(2) of the Law). The contractor must prove, with concrete evidence, that the war is what caused the specific delay and that the conditions of frustration are met.

My contract was signed before July 2022: what applies to me?

The old wording of section 5A: 60 days of grace, and once the 60 days have passed, retroactive compensation from the contractual date: ×1.5 the rent for the first eight months and ×1.25 from the ninth month. Amendment No. 9 applies only to contracts made from 7 July 2022.

How much compensation do you get for late delivery of an apartment?

In contracts signed from 7 July 2022: there is no compensation for the first month of delay. From the end of the first month to the end of the fourth month, the rent of an apartment of similar size and location for each month; from the fifth month to the tenth, ×1.25; and from the 11th month, ×1.5. If the contract set higher compensation for delay, you get the higher of the two (section 5A(a) of the Sale (Apartments) Law).

When must the contractor pay the compensation?

At the end of each month, for that month (section 5A(b) of the Sale (Apartments) Law). The buyer does not need to wait for the apartment to be delivered to demand it. If the contractor does not pay, send a written demand with the calculation, and later you can sue.

Can you sue the contractor in small claims?

Yes, if you sue as individuals for an amount that does not exceed NIS 39,900 (as of 1 January 2026; section 60(a) of the Courts Law). A long delay usually comes to a higher amount, and then the claim is filed in the Magistrates’ Court or, for very high amounts, in the District Court. When the same delay harmed many buyers in the same project, a joint claim or a class action can also be considered.