Impairment due to construction defects – When is compensation determined??
Many home buyers believe that Compensation for construction defects amounts to the cost of repairing the defects only. In practice, the law and case law in Israel recognize that certain construction defects causeContinuous and even permanent damage to the value of the apartment, even after an apparent full repair – a situation that entitles the purchaser to additional compensation for Impairment.
In this article, we will review in detail when compensation for depreciation is awarded, how it is proven, what claims contractors raise, and how the courts in Jerusalem treat them – from the experience of Halevi Law Firm in Jerusalem.
What is depreciation in a residential apartment??
Legal and economic definition of impairment
Impairment It is a reduction in the market value of the apartment, caused by construction defects, and does not disappear even after repairs are made. It is an independent economic damage, distinct from the direct cost of repairs.
The difference between repair cost and permanent damage
The cost of repair is intended to restore the physical condition to its original state, while depreciation reflects the market's loss of confidence in the apartment - an element that in many cases cannot be completely eliminated.
In which cases do the courts award compensation for depreciation??
Recurrent or persistent impairments
Chronic moisture, sealing failures, or repeated flooding are considered defects that damage the value of the apartment even after repair.
Structural or skeletal defects
Construction defects, stability problems, or standard deviations in the building's frame – even if they have been repaired – create a design stigma.
Planning exceptions and material deviation from the plan
Exceeding the declared area of the apartment, damaging the ceiling height, or making a substantial change to the structure - are recognized grounds for a decrease in value.
Damage to the marketability of the apartment
The courts examine the effect of the defect on the value of the apartment. In my opinion a reasonable buyer In the free market.
Decrease in value even after repair – When does this happen??
History of severe and persistent impairment
כאשר דירה סבלה לאורך זמן מליקויים חמורים – ובעיקר רטיבויות, חדירת מים, עובש או כשלים חוזרים באיטום – בתי המשפט מכירים בכך שהדירה נושאת עמה “מטען היסטורי” שלילי. גם לאחר תיקון טכני, קונים פוטנציאליים נרתעים מדירות עם עבר בעייתי, דבר המשפיע ישירות על שווי השוק שלהן.
The ruling determined that the mere fact that a defect is repeated strengthens the claim of permanent impairment, as there is a reasonable fear that the problem will return in the future.
Repair that affects the finish, design, or quality of life
In many cases, repairing the defect itself causes additional damage: lifting flooring, replacing walls, lowering ceilings, damaging aesthetics, or changing the design of the apartment. Even if the defect is repaired, the final result is inferior to the condition promised in the contract – hence the decrease in value.
בתי המשפט בירושלים קבעו כי רוכש אינו חייב להשלים עם דירה “מתוקנת אך פגומה”, וכי פגיעה באיכות החיים או בגימור מצדיקה פיצוי נוסף.
Reasonable concern about the recurrence of the defect in the future
When there is a real probability of the defect recurring – for example, systemic sealing problems or design failures – it is recognized in the case law Future impairment. There is no requirement to prove actual recurrence of the defect, but rather proof of a real and well-founded risk is sufficient.
How to prove impairment?
Appraiser's opinion – Almost necessary condition
In the vast majority of cases, proof of impairment is required. Opinion of a certified real estate appraiser. The courts consider the appraiser the only professional authorized to assess the impact of construction defects on the value of a property.
A claim without an appraiser's opinion will usually be rejected in this component, even if the defects themselves have been proven.
What must appear in the appraiser's opinion?
A quality opinion includes:
A detailed description of the defects and their impact on the apartment
A clear distinction between Repair cost between Impairment
Market analysis and comparison to similar apartments without defects
Determining the rate of depreciation – in percentage and monetary amount
Courts in Jerusalem tend to adopt reasoned appraisal opinions, especially when they are supported by engineering evidence.
Combining engineering and appraisal opinions
The engineering opinion proves the existence, severity, and nature of the defect, while the appraisal opinion translates the defect into economic damage. This combination creates an especially strong evidentiary foundation.
In many cases, the court appoints an expert on its behalf - but the initial opinions significantly influence its conclusions.
Common claims from contractors – And how the courts deal with them
“After repair, there is no decrease in value.“
This is one of the most common claims from contractors. The courts in Jerusalem They have rejected this claim time and time again, stating that physical repair does not necessarily erase damage to the value of the property.
כך למשל, בת”א (שלום י-ם) 36428-03-16 כהן נ’ חברת בנייה, compensation was awarded for a decrease in value despite the correction of humidity, due to damage to market confidence in the apartment.
“The apartment is habitable.“
Habitability is not the same as market value. Even a habitable apartment may be worth less due to past defects or extensive repairs. Courts distinguish between a minimum standard of living and economic value.
“This is reasonable wear and tear.“
especially During the inspection and warranty periods, The burden of proving that this is reasonable wear and tear lies with the contractor. The ruling determined that material defects cannot be defined as natural wear and tear in a new apartment.
Common mistakes made by home buyers that weaken a depreciation claim
Advance waiver of impairment requirement
Many buyers focus solely on demanding repairs, without demanding compensation for depreciation – thereby giving up a significant compensation component that could reach tens or even hundreds of thousands of shekels.
Lack of appraiser's opinion
A claim for depreciation without a real estate appraiser is rejected in most cases. Even a serious defect will not be eligible for financial compensation without an appropriate appraisal infrastructure.
Prolonged delay before taking action
A long wait between the discovery of the defect and the filing of a demand or lawsuit undermines the causal link between the defect and the economic damage, making it difficult to prove impairment.
Relevant ruling – Emphasis on the courts in Jerusalem
ע”א 5602/03 סגל נ’ שיכון ופיתוח
The Supreme Court reinforced the principle of full compensation to the buyer – beyond the cost of repair.
ת”א (שלום י-ם) 36428-03-16 כהן נ’ חברת בנייה
Compensation was awarded for a decrease in value due to ongoing dampness in an apartment in Jerusalem.
ת”א (מחוזי י-ם) 2191-09-18 פלוני נ’ קבלן
An impairment loss was recognized even after correction, due to an impairment in the asset's marketability.
Frequently Asked Questions
Does every defect qualify for impairment??
No. Only material defects that have a real impact on the value of the apartment.
Is it possible to receive both compensation for repairs and depreciation??
Yes, when it comes to separate damages that do not overlap.
Does depreciation also apply to a second-hand apartment from a contractor??
In certain circumstances – yes, subject to proof of the connection to the original defect.
Who determines the depreciation rate??
First, an appraiser on behalf of the buyer, and sometimes an appraiser on behalf of the court.
Summary
When is it important to contact an impairment lawyer in Jerusalem?
Decrease in value due to construction defects is real damage, which is sometimes ignored – but the courts in Jerusalem recognize it and compensate for it when it is properly proven.
If you have purchased an apartment in Jerusalem and are dealing with construction defects that have affected the value of the apartment, it is recommended that you seek legal advice from: Halevi Law Firm in Jerusalem, which specializes in assisting apartment buyers and obtaining full compensation – including depreciation.
An early professional examination may make the difference between partial compensation and full realization of your rights.
Hebrew 
English