17 apartment owners in the Jerusalem of Gold luxury project built by businessman Shlomo Eliahu claim that the tenants in the project have been suffering for a long time from deficient management and maintenance of the building and various nuisances caused by short-term rentals of the apartments. The apartment owners filed a complaint to this effect with the Jerusalem land registry supervisor.
The claim, filed through Adv. Refael Yulzari and Adv. Matan Geringer from the Gideon Fisher & Co. law firm, states that the Jerusalem of Gold project includes two wings with seven and 12 floors and a total of 80 apartments. The claimants purchased apartments in the building in 2010-2017.
"This claim involves a luxury housing building in the heart of Jerusalem, including concierge services, underground parking, a partially commercial floor, luxury swimming pool, spa, Jacuzzi, fitness room, games room, a mikveh (ritual bath), etc.," the claim states.
"In recent years, however, various aspects of the building involving management of the condominium have deteriorated," the claim asserts. "Some of the substantial deterioration in the management and maintenance of the common property has been occurring in the building for a long time as a result of the unacceptable practice of renting out some of the apartments for short-term rentals."
Short-term rentals: "Severe damage to the apartment owners"
The claimants explain that the lease period usually varies from a few days to a few week, mainly though special Internet platforms, such as Airbnb, Booking.com, etc. "Actually, in some cases, the building is portrayed in various advertisements as a real hotel," they state, adding that they have no way of supervising and finding out which of the apartment owners are renting out their apartments through short-term rentals, because renting is conducted anonymously or through an agent.
"Renting out apartments for short terms causes severe damage to owners of the other apartments living in the building," the claimants add. "Renting out apartments for vacations unavoidably causes nuisances to tenants of the entire building. Random renters create unbearable noise in the building, and leave garbage and filth in shared spaces, such as the lobby, the fitness room, the pool area, and the sealed rooms on every floor. Renting out apartments to random tenants using the apartments to hold parties and large-scale events, and even by the hour, obviously affects the warm feeling of a residential building."
In addition to harming the quality of the luxury living quarters promised them when they bought the apartments, the claimants also assert that they are suffering direct financial damage from the reduced attractiveness of the building, as reflected in the increasing difficulty in renting out their apartments in the building under long-term leases or selling them without suffering a loss.
The apartment owners allege that renting out apartments for short periods breaches the purchase agreement signed by the apartment owners in the building, in which they buyers stated that the apartment was being sold for residential purposes only. The buyer undertook not to use the apartment for any other purpose. The agreement also includes a commitment by the buyer that use of the apartment will not disturb or annoy users of the other units in the building.
It is also asserted that the agreement with the managing company is also being violated, because the company is responsible under the agreement for maintaining the level of the building. "Short-term rentals affect the prestige and level of the building, and frequently disturb and annoy the residents."
The claimants state that they contacted the management company a number of times and warning it about what was happening. The company merely sent a number of warnings to all of the building's residents demanding that they refrain from renting out apartments for short periods. "These letters were completely ignored by the apartment owners renting out their apartments for short periods," the claim states. "The situation in the building did not change. Apartments in the building are still being offered for rent on various websites, and random renters continue to frequent the building and its facilities. The noise and filth continue to disturb the residents in the building."
The claimants are therefore asking the land registry supervisor to order the companies to take enforcement measures against apartment owners violating their contractual obligations "and to put an end to the harmful short-term rental of apartments in the building, as stipulated in the purchasing and management agreements."
Breach of the Sales (Dwellings) Law: The company does not divulge the residents' particulars
The claim further states that despite the fact that the building has been occupied and managed for several years, it has not yet been legally registered as a condominium, no general meeting of all of the residents has taken place, and no representatives of the residents have been elected. The residents assert that they contacted the seller to find out the names and particulars of the residents in the building in order to make it possible to hold a meeting of the residents, but the seller did not disclose the information.
The claimants assert that this is a breach of the Sales (Dwellings) (Assurance of Homebuyers' Investments) Law, and they are therefore asking the land registry supervisor to disclose to them the contact details of the owners of apartments in the building.
Management fees: Higher than agreed
The claimants further state that they are concerned that the management fees charged by the management company are higher than what they should pay. They allege that they are being charged higher management fees because the seller still owns many apartments in the building that have not yet been sold, and the seller is not paying its shares of the management fees, as required.
"As far as is known to the claimants, Shlomo Eliahu, a party at interest in the seller, has a substantial debt of NIS 1 million to the management company," the claim states. "Since Eliahu holds a majority of the votes, because some of the apartments have not yet been sold, he has an interest in the management company being under his control." The claimants add, "This conduct is unacceptable and illegal."
The claimants further state that the company is denying them the opportunity to freely and regularly read the management company's financial statements and evaluate them, despite legal obligation of the building's treasurer to act transparently. They are therefore asking the land registry supervisor to disclose the financial statements of the management company in the building, starting in 2014.
Response: "A few residents are dissatisfied"
The Jerusalem of Gold project said, "The claims are false. The company managing the project conducts a transparent dialogue with the owners of apartments in the project in order to maintain the high level of the project and reach agreement on various matters. There are naturally a few dissatisfied residents. One of the claimants himself rents out an apartment for short periods.
"The allegations raised in the statement of claim were brought to our attention for the first time shortly before they were published in the media. Publication in the press before contacting the company is astonishing, and raises questions about the complainants' motives. We will study their complaints and take action, if necessary.
"We act, and will continue to act, with full transparency towards the owners of the apartments, and in the high level of service, for the benefit of the Jerusalem of Gold project and its tenants."
Published by Globes, Israel business news - en.globes.co.il - on March 24, 2019
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