Real estate8/25/2026

Court Allows Two Families to Recover Their Money Due to Delay in TAMA 38 Project

The Tel Aviv District Court granted the application of two families that purchased three apartments in a TAMA 38/1 project in the Neot Afeka neighborhood. Judge Noa Grossman allowed them to cancel the transactions and recover the money they had paid through guarantees under the Sales Law, following a significant delay and the appointment of an administrator for the project.

Key facts

•Court: Tel Aviv District Court
•Judge: Noa Grossman
•Project: TAMA 38/1, 50–52 Shlonsky Street
•Purchasers: two families, three apartments
•Contractual delivery date: mid-2025
•The case number, date of the decision, and sums are not specified in the source

What Happened

Y. Heuberger Entrepreneurship advanced a project at 50–52 Shlonsky Street: an existing building containing 32 apartments, plus 20 new apartments, of which 14 were sold. Following financial difficulties, the court appointed attorney Gonen Kastanbaum as administrator for the purpose of completing construction. The appointment was made at the request of the companies that financed the project, Michlol Real Estate Financing and Clal Insurance, which were joined by the Sigma City fund as a source of additional capital.

The Purchasers’ Demand

The two families, which purchased three apartments, stated that under the contracts, the apartments were supposed to be delivered to them in mid-2025. About a year after that date, they sought to cancel the transactions and recover the money they had paid, explaining that they were being forced to pay both a mortgage and rent at the same time. Other purchasers agreed to the continuation of the project under the management of the administrator appointed by the court.

Why the Court Allowed the Refund

The court ruled that the significant delay in delivering the apartments constituted serious harm to the purchasers’ interests. The judge noted that guarantees under the Sales Law should protect not only the eventual receipt of the apartment: compliance with the delivery date is also important. In her view, the developer’s collapse and the appointment of an administrator create a crisis situation in which a purchaser wishing to leave the project may be allowed to realize the guarantee and recover the purchaser’s money.

The Financing Entities’ Arguments

The financing entities argued that they had provided additional funds and that they expected the project to be completed in November of the following year. In their view, allowing purchasers to leave projects undergoing rehabilitation proceedings could increase the cost of guarantees, make additional financing more difficult, and jeopardize the completion of construction. Nevertheless, the court gave priority to the circumstances of the specific families bearing double housing expenses.

Possible Implications

According to Globes, this is an unusual decision and the first of its kind: in the past, courts generally proceeded on the assumption that the guarantee ensures delivery of the apartment even in the event of a delay. The new approach may broaden the possibility of recovering funds when the developer collapses, the project is transferred to an administrator, and the timelines are postponed significantly. At the same time, it could increase the risks and the cost of financial backing for residential projects.

What this means for you

A purchaser of an apartment in a project that has been severely delayed and transferred to an administrator appointed by the court following the developer’s collapse is not necessarily required to wait for construction to be completed at any cost. The decision shows that in a case of a significant delay and a heavy financial burden, a guarantee under the Sales Law may be used to exit the transaction and recover the funds, although the conclusion depends on the circumstances of the specific project.

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Case analysis based on court rulings