Shabbat Parashat Bereishit 5777

P'ninat Mishpat: Fixing Status of a Non-Standard Apartment – part I

Case: The plaintiffs (=pl) bought from the defendant (=def), for 910,000 shekels, an apartment in an old building that does not have a building permit or a Tofes 4 (certificate of fitness for occupancy). It is also not connected directly to a meter of the electric and water companies (they pay through a neighbor). After pl complained to the municipality, the latter issued an order to destroy the building (it may never be acted upon). Def did not inform pl of these deficiencies but argues that pl could have easily found out themselves. Pl demand that def take action to fully legalize the apartment/building, the feasibility of which is under dispute between the sides. Alternatively, pl demand 400,000 shekels’ compensation. Def claims that the building’s legal status does not affect the apartments’ value. He offered pl to try to sell the apartment and if they cannot get a price that is fit for normal apartments, def will buy it from them at full price. Def made several other offers involving buying back the apartment with certain conditions, but pl want to stay in the apartment.

Ruling: A major part of the disagreement is whether the sale was just a transfer of property, whose remedy when flawed is bitul mekach (cancelling the sale), or if there is also an element of obligation to make the purchase feasible. According to the former possibility, pl cannot force def to act to fix the problems (in this case, legal ones) with the apartment. The contract’s main clause refers to hereby selling the apartment, which implies the former possibility. However, there is also the following clause: “The seller obligates himself to transfer all his rights in the apartment onto the name of the buyer.” That could be understood two ways: 1. The seller just promises not to leave any rights for himself but transfer everything he has to the buyer. 2. The seller obligates himself to transfer the rights in the Tabu, and this latter stage is actually the sale (this is common in Israeli real estate contracts). In that case, there is an element of obligation, which could require def to take other steps to complete the sale by making it legal.

There is a machloket between the K’tzot Hachoshen (203:2) and Netivot Hamishpat (203:6) whether one can obligate himself to sell a specific field, and the Netivot’s position, that he can, is accepted. However, in this case, def’s obligation would have been only to transfer existing rights, as there is no hint of obligation to change the apartment’s legal status. This is strengthened by a clause in the contract in which the buyers accept the apartment “as is,” including from a planning perspective (i.e., issues of the nature at question here). While pl tried to compare the demands they are making to the obligation to write a document to confirm a sale, there is a difference. Writing a contract is a normal part of the sales process, as is the obligation of a contractor to take the steps to make the apartment livable and legal. However, pl’s demands are not a normal part of selling a second-hand apartment, which is always assumed to be as legally set as it is going to be.

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