Iranian missile strike and war delays at center of Tel Aviv luxury penthouse dispute
Buyers demand $1 million as Hagag Group blames force majeure from regional conflict.
Buyers of four luxury penthouses in Tel Aviv, each costing millions of shekels, are demanding a total of approximately NIS 3 million (approximately $1 million) from Hagag Group Berliner. The claim is based on alleged delivery delays ranging from about 12.6 months to approximately 23 months.
The defendant company, backed by its parent Hagag Group Real Estate Entrepreneurship, argues that since October 7, the Israeli construction industry has been significantly disrupted. It further claims that during the fighting with Iran in June 2025, “the project was hit by a missile near the site, causing heavy physical damage to infrastructure.” According to the company, this incident required extensive restoration work that delayed completion, constituting a classic force majeure event justifying substantial timetable extensions.
The plaintiffs, however, argue that the war has no connection to the delays. They claim the apartments were scheduled for delivery before the war with Iran, during 2024, and that the delay stems instead from management failures, including contractor changes and supervision issues.
The lawsuit was filed in March by the purchasers of four apartments, represented by attorney Erez Hess. The plaintiffs state that they purchased luxury units in a TAMA 38/1 urban renewal project in Tel Aviv. The defendant is carrying out a strengthening and expansion project that includes reinforcing existing buildings and constructing six new penthouse apartments on the roof. The plaintiffs purchased four of these six units.
The contracts were signed between 2021 and 2022. The apartments are described as six-room units of approximately 200 square meters, with balconies of around 50 square meters. The purchase prices range from approximately NIS 8 million to NIS 9.8 million. Although the apartments were scheduled for delivery, they have not yet been handed over.
The plaintiffs further argue that the defendant markets itself as part of the Hagag Urban Renewal Group and is affiliated with Hagag Real Estate Development, a public real estate company controlled by the Hagag brothers.
They claim that, as of the filing date, the apartments have still not been delivered, representing a significant breach of contract. They further allege that they have not received monthly compensation for delays, as required under the Sales Law and regulatory guidelines.
The plaintiffs argue that the defendant will attempt to shift responsibility to external parties and wartime conditions, but that the delays are primarily the result of its own conduct.
They also seek relief preventing the defendant from charging interest and indexation adjustments on the outstanding payments beyond the contractual delivery date. In addition, they argue that the VAT rate should remain at 17% rather than the increased 18% rate, since the apartments were supposed to be delivered before the VAT change in January 2025.
The defendant was granted time to file its defense by early July. However, in response to the plaintiffs’ request for interim relief, attorney Ala Diab of Amar Reiter Jeanne Shochatovitch law firm argued that the plaintiffs had not established a sufficiently strong evidentiary basis for their claims.
The defense further stated that despite “external setbacks unprecedented in the country’s history,” including the COVID-19 pandemic, the Swords of Iron War, and direct combat events with Iran, including a missile strike near the project in June 2025, the company continues to operate and is working to complete the project.
It also argued that contractual remedies for delays do not include freezing VAT or indexation adjustments, and that the construction sector has faced severe disruption since October 7 due to labor shortages, mobilization of reservists, and restrictions on construction activity.
The defendant added: “The company will address the claims in court. The project has faced an extraordinary sequence of external events beyond the control of the parties, including the events of October 7, the Swords of Iron War, and the ongoing conflict with Iran, during which the project was hit by a missile that fell nearby and caused significant damage. These events constitute classic force majeure and have caused delays. The parties are currently conducting serious and respectful negotiations in order to resolve their disputes.”
