Press release

Haifa District Court; Case 53655-06-21; before the Honorable Judge Hananel Sharabi: Karamzin and nine other plaintiffs v. Shikun & Binui Real Estate Ltd., with a third-party notice against the Israel Land Authority.

 Owners of five apartments sued Shikun & Binui through our firm. The proceedings exposed a major scandal: the construction company sold hundreds of buyers a “capitalized leasehold” right, although its own right was an ordinary lease ending in 2033. It failed to disclose that it owed the Israel Land Authority tens of millions of shekels, preventing registration of the apartments in the buyers’ names.

A financial dispute between the Israel Land Authority and construction company Shikun & Binui Ltd. has prevented registration of condominium buildings and residents’ land rights since at least 2011. How can hundreds of residents in twelve buildings on Halmish Street in Haifa face the possibility of losing their homes in a few years, despite having acted lawfully?

Owners of five apartments in four buildings on Halmish Street in Haifa, who bought from Shikun & Binui Real Estate Ltd., brought a claim in the Haifa District Court. Construction of the four towers containing 192 apartments was completed long ago, but neither registration of their leasehold rights nor registration of the four buildings as a condominium has been completed.

Shikun & Binui served a third-party notice on the Israel Land Authority. Their pleadings revealed an astonishing fact: while Shikun & Binui purported to sell buyers capitalized leasehold rights, the State maintains that the company holds only an ordinary lease ending in 2033, when buyers will have to return possession of their apartments to the State. It also emerged that the problem affects twelve buildings, not merely four: hundreds of purchasers face a real risk of having to buy their homes again from the Authority in eleven years.

At the hearing, Judge Hananel Sharabi accepted the residents’ arguments and ruled that the dispute between Shikun & Binui and the Authority must proceed separately from the owners’ action. The parties were directed to pursue their financial dispute, which the Authority says amounts to NIS 20 million, in separate litigation or arbitration, and to advance registration of buyers’ rights in the twelve buildings. The decision thus achieved a breakthrough for hundreds of families affected by the affair.

The plaintiffs allege a scandal of enormous proportions involving an administrative authority and a leading construction company. Shikun & Binui concealed its dispute with the Authority from buyers, failed to inform them of the risks they faced, collected money unlawfully and provided incorrect information about the lease’s expiry date. The resulting situation is outrageous: the Authority approved the project and the sale of hundreds of apartments, yet failed to disclose the nature of its dispute with Shikun & Binui or warn buyers of the risks, while refusing to allow the company to register their rights. Hundreds of buyers are thus held “hostage” as part of the effort to force Shikun & Binui to pay enormous sums.

As noted above, at the hearing on March 6, 2022, the Haifa District Court made clear that buyers must not be held “hostage.” It therefore ordered Shikun & Binui and the Authority to resolve their dispute over capitalization fees separately from the residents, and required the Authority to sign all documents necessary to register the buildings as a condominium and the apartment rights in the residents’ names as soon as possible.

Ultimately, a claim brought by the owners of just five apartments through Attorney Uri Shiloh of E. Shiloh & Co. exposed the full facts of the scandal and produced a decision marking a breakthrough for hundreds of apartment owners and purchasers in twelve buildings. The dispute may now be nearing its conclusion, and the claim may provide a solution for many owners who were not told the full truth and who, through no fault of their own, are the principal victims.