Have you paid more for the apartment than your friends in the purchase group? It is not discrimination

Dozens of members of a Harish purchasing group claimed discrimination compared with purchasers who joined the group at an earlier date since they had to pay 11% more for the same apartments • As part of the arbitration process, it was said that since at the initial date there was less certainty of the project actually taking place, the principle of equality was not harmed.

29.05.2019 | Arik Mirovsky

Managers of a purchasing group in a real estate project are entitled to collect different prices from members of the group, without the principle of equality being harmed – so it arises from the decision of retired judge Hila Gerstel, who served as arbitrator in a dispute that broke out between purchasers of apartments in the Neot Harish purchase group and the group’s management.

According to the decision, Neot Harish management acted lawfully when it required those members who joined the group at later stages to make higher payments for the apartments they purchased.

Trouble in bundles in the purchase group

With 705 members, this is one of the largest purchasing groups in Israel and it has suffered many difficulties over the course of its existence. Among other things, Ortam-Malibu, the company executing the project, collapsed and this contributed to delays in completion of the project. Against the background of complaints of delays and the rising prices of the apartments, in recent months buyers of the apartments demonstrated in front of the offices of the organizing company – Residential Administration, which is controlled by Moti Peled and Shlomo Ventura.

There is also disagreement among members of the group themselves. This broke out among the group’s first 593 registrants, who signed up during the period of its establishment in 2012, and between the 112 members who were added to it two years later, when additional apartments were approved for the project under the “Sheves Regulations”. As a result, they are called the Sheves Group.

95 members of the Sheves Group claimed in the arbitration proceeding, through attorneys Talia Glick and Yigal Borochovsky, that they were discriminated against on the basis of their date of joining the group, and they were forced to pay prices for their apartments that were more than 11% higher than the prices paid by the first group members. Their request was to equate house prices among all members of the group.

The group’s management, represented by attorneys Menachem Abramovich and Gal Rosenzweig of law firm Hamburger Evron & Co., claimed it was entitled to collect higher payments from the new members. In their view the additional payments imposed on the Sheves Group arose from the distinct difference between the veteran members, who took upon themselves many risks, and between the members of the Sheves Group, who entered the project at a time when conditions we considerably more certain.

In her decision, Gerstel sided with the position of the association’s management, when she wrote that “I found that there is a difference between the veteran members and the Sheves members. On the date when the veteran members joined the association, it was not yet clear whether the project would be implemented or not; it was not clear which of the secondary sites the association would win, and anyway initial building permits had not yet been given. In contrast, when the new members joined, it was clear that the association had already won the tender, it was clear which secondary area it had won, and building permits had even been granted”.

A certain amount of compensation for the Sheves Group

Gerstel also focused the arbitration ruling on the question of whether the organization’s different treatment of the Sheves Group falls within the category of discrimination or was done lawfully. She rejected the position of the plaintiffs, according to which equality was expressed mathematically in the number of shekels that could be collected from each member and determined that in a complex reality it is possible to find difference that is not discrimination.

“It is therefore possible to draw a conclusion that on the one hand proof of a certain amount of difference between the veteran members and the Sheves members, inherently allows for a certain differentiation in payments between the two subgroups; on the other hand, no evidentiary basis was laid for reaching a conclusion as to whether additional payments of 10-11% is not an additional payment that is fitting of this difference”, she wrote in her decision.

Alongside this decision, Gerstel found that the members of the Sheves Group should be compensated for amounts collected from them beyond the explicit decision taken by the group’s management in April 2015. At that time, it was determined that they had to make a one-time payment of ILS 60,000, but a larger amount was later collected from them. In this regard, Gerstel determined that the original decision must hold firm, and that they are therefore entitled to compensation.