A real estate developer was approximately 6 months late in delivering an apartment to the buyers and provided reduced compensation to the buyers, in return for signing a compromise agreement in which the buyers waived all claims regarding the delay.
The court accepted the buyers’ claim and ruled that the settlement agreement was invalid and that the developer must pay the full compensation according to the law. The provisions of the law fulfill a consumer purpose and grant buyers compensation for late delivery at a fixed rate that cannot be deviated from, except for the benefit of the buyers. Here, the developer conducted negotiations with the buyers, at the end of which the buyers agreed to receive compensation at a reduced rate, but in return for a full waiver of claims against the developer. There are inherent power imbalances between the parties, and therefore the developer’s action should be seen as an attempt to gain a legal advantage at the expense of the buyers, who had not yet received possession of the apartment and were trying to extract any possible compensation in order to reduce the damages they suffered due to the delay in receiving the apartment. Consequently, an agreement to receive reduced compensation, even if signed voluntarily, is invalid and the developer must compensate the buyers for the balance.
