Tel-Aviv District Court judge Uri Goren at the end of last week handed down a ruling to the effect that Herzliya Marina apartments already sold must also be leased out. He assigned the responsibility to the Herzliya municipal local planning and building committee. The prevailing assessment is that Herzliya Marina developers have already sold 700 of the planned 1,500 apartments. Only a small number of them are already inhabited.
The Herzliya municipal local planning and building committee tried to obtain the signed sales contracts. A written demand it issued to the developers several months ago went unanswered. In order to give effect to the judgement, the Municipality will have to renew the demand. This time, the developers cannot ignore it.
Goren rejected the developers' arguments as to injury to the purchasers' title, explaining that, in the Marina, no title to the residential units existed from the outset. On the face of it, Goren disregarded the technical problem involved in requiring private individuals to rent out an apartment, even though they were apparently misled and understood that they could live there themselves. Exposure of the contracts, real estate people believe, will show that most of them are contingent. Which is to say that Judge Goren is aware of whom he is dealing with, and realised that a general assessment would only further obfuscate the already unclear position.
In the contract plans, the real estate sector believes, many purchasers promised cancellation without a fine, in any event of the apartments not serving exclusively for residential purposes. These conditions, they say, will greatly reduce sales, the profits accruing to the developers and, of course, will aggravate the problem of the obligatory leasing of sold apartments. They estimate that due to the suspensory conditions, the developers will try to reduce exposure and disclose only general data, in order to avoid the negative image that would ensue if the stipulations were presented.
Judge Oren, in his precedent-setting judgement, construes the planning term "vacation apartments" to mean apartments for leasing only. This judgement is a first milestone in the success of the fight over Israel's other protected beaches and areas. The judgement will thwart attempts by various developers to sell residential apartments under a permit for the construction of vacation apartments.
It may reasonably be assumed that developers who sought to sell residential apartments under other vague planning approvals will be unable to realises their plans. One of the first plans that will evidently be halted is that of Secom, situated to the south of the Marina. This is a plan for building an "apartment hotel" on the northern shore of Tel-Aviv (near the Sea and Sun project).
With its permission for the "apartment hotel", the Tel-Aviv municipal local planning and building committee also included a permit for the construction and sale of residential apartments. This was despite objections posted by private and ecological concerns. If Ashtrom, owner of the lot, tries to sell residential apartments, it will evidently encounter new opposition. This time, the opponents will be able to cite the district court's ruling, which reinforces those provisions of the planning scheme that designate the area for hotel use only.
Published by Israel's Business Arena December 12, 1999