Handing over a structure without Form 4 – Insurance aspects for contractors/developers
Jul 12, 2022
מאת: איציק סימון
המציאות בענף הנדל"ן בישראל יוצרת לא מעט מצבים שבהם דירות ומבנים נמסרים או מועברים לידי רוכשים בטרם התקבל עבורם טופס 4. דהיינו, לפני שבעל היתר הבנייה הגיש את מלוא המסמכים הרלבנטיים לרשות המקומית וקיבל את האישור הסופי לאכלוס ולחיבור לתשתיות.
היות שמסירת דירות לפני טופס 4 נעשית באופן תדיר (מדי), חשוב לשים זרקור על הנושא מבחינת היבטי הביטוח הכרוכים בכך. ננסה לעשות זאת בקצרה ברשימה שלפניכם.
By: Itzick Simon
The reality in the real estate industry in Israel creates quite a few situations in which apartments and buildings are delivered or transferred to buyers before Form 4 has been received for them. That is, before the building permit holder has submitted all the relevant documents to the local authority and received final approval for occupancy and connection to infrastructure.
Since the handover of apartments before Form 4 is done (too frequently), it is important to shine a spotlight on the issue in terms of the insurance aspects involved. We will try to do this briefly in the list below.
Why do contractors and developers ask to submit before receiving Form 4 and occupancy approval?
A common example of a situation where delivery is made before Form 4 and occupancy approval can be when a developer leads a TAMA 38/1 project and allows a tenant who purchased one of the developer's apartments (the new apartments built on the roof of the building) to enter the property and make renovations and adjustments.
Contractors and developers often fall behind schedule and find themselves "pushed to the wall" in terms of late deliveries, fines, and the fear of being sued for "breach of contract." Often, they seek to deal with the situation by allowing tenants to enter the property and perform various (non-residential) activities.
This is doubly evident when the delays do not stem solely from the construction work but are rooted in administrative obstacles (related, for example, to dealing with the local authority and/or the Planning and Building Committee). The contractor who is delayed feels helpless and believes that submitting Form 4 ahead of time will slightly reduce the level of pressure he is under.
It should be emphasized right away that, from an insurance perspective, delivery before Form 4 is problematic, to say the least . On the one hand, contractor work insurance is still valid, but not for private work ordered by tenants, and on the other hand, in most policies accepted in Israel for product liability insurance, the condition for coverage is "Form 4 and occupancy approval."
This is a kind of gray interim period that puts the entire project at risk. For example, the lack of a clear identity of an insurer following a fire in the new buyer's apartment that caused heavy damage to neighboring apartments, the common property, and even the entire building.
דוגמה נפוצה לסיטואציה של מסירה לפני טופס 4 ואישור אכלוס יכולה להיות כשיזם מוביל פרויקט של תמ"א 38/1 ומאפשר לדייר שרכש את אחת מדירות היזם (הדירות החדשות שנבנו על גג הבניין) להיכנס לנכס ולבצע שיפוצים והתאמות.
פעמים רבות קבלנים ויזמים מתעכבים עם לוחות זמנים ומוצאים את עצמם "נדחקים לקיר" מבחינת איחורי מסירה, קנסות וחשש להיתבע בגין "הפרת חוזה". לא אחת הם מבקשים להתמודד עם הסיטואציה על ידי מתן אפשרות לדיירים להיכנס לנכס ולבצע בו פעולות שונות (לא מגורים).
הדברים בולטים שבעתיים כשהעיכובים לא נובעים מעבודות הבנייה גרידא אלא נעוצים במכשולים מנהלתיים (שקשורים, למשל, להתנהלות מול הרשות המקומית ו/או הוועדה לתכנון ובנייה). הקבלן שמתעכב חש חוסר אונים וסבור שמסירה לפני טופס 4 תנמיך מעט את מפלס הלחצים שהוא נתון בו.
יודגש כבר עתה שמבחינת ביטוח, מסירה לפני טופס 4 היא בעייתית ובלשון המעטה. מצד אחד ביטוח העבודות הקבלניות עדיין תקף אך לא על עבודות פרטיות המוזמנות על ידי דיירים, ומצד שני במרבית הפוליסות המקובלות בישראל לביטוח חבות מוצר התנאי לכיסוי הינו "טופס 4 ואישור איכלוס".
זוהי מעין תקופת ביניים אפורה שמעמידה את הפרויקט כולו בסיכון. לדוגמה, העדר זהות ברורה של מבטח בעקבות מקרה של שריפה בדירת הרוכש החדש שגרמה לנזקים כבדים לדירות סמוכות, לרכוש המשותף ואפילו למבנה כולו.
At our insurance agency, which has been dealing with construction insurance for over 30 years, we are sometimes asked to find creative solutions for contractors and developers who are interested - despite the risks - in handing over the building or part of it before Form 4.
The best course of action here is to encourage the contractor/developer to avoid the move and to expedite the receipt of an occupancy permit form as much as possible. If there is no escape, the developer is required to handle the legal aspects and seek the advice of his lawyers, and we are sometimes asked to prepare an insurance supplement that may be appropriate to reduce the risk.
For example, it is necessary to require the buyer who enters the property before receiving Form 4 to declare his responsibility for damages and even ask him to present proof of insurance for the work he is planning upon handing over the key. This is an incomplete solution but can be helpful.
Another important rule is to make sure that the work done in the apartment by the buyer will not delay the receipt of Form 4 for the entire building. It is advisable to limit them to a clear and predefined time period that corresponds with the pace of the work and the schedules for receiving the occupancy permit form for the building.
Why does the buyer's private insurance not provide full coverage? There could be several reasons for this, and a "classic" example can be given. Private insurance will likely be purchased against the property value of an apartment whose construction cost (for the purpose of this article) is approximately 1 million shekels. This is while damage from events in the apartment that exceed the common property or to other apartments (such as a fire or flood) could damage the entire building, which is worth tens of millions of shekels. In other words, the apartment owner will not be protected for the entire aforementioned amount, and things are clear.
Is there a solution for insurance before submitting Form 4?
An important issue that must be emphasized is that renovation work can be just as dangerous as "regular" construction work, and even more so . Studies that examine the construction industry in terms of work accidents repeatedly find the renovation industry to be one of the most dangerous in Israel.
According to data from the Israel Renovation Contractors Association, every year 1 in 10 renovation contractors is injured at work, either by themselves or their employees. In 60% of cases, this is due to the use of tools, in 30% of cases due to a fall from a height, and in about 6% due to electrocution.
This means that the tenant who takes possession of an apartment before Form 4 and brings in renovation contractors to make adjustments is " in a risk group ." Whether he contracts with a main renovation contractor (and is defined as the "work commissioner") or whether he works with several professional contractors (and is defined as the "construction operator").
In this regard, it is also possible to mention a solution that can eliminate the need to hand over the apartment before Form 4, which is the performance of the private adaptation and renovation work by the main contractor, while increasing the value of the work and including it under the umbrella of the contractor's policy for the entire project. This is a correct and common solution in TAMA 38/1 projects that are based on strengthening and expansion, when tenants want to do private renovation in their apartment alongside the renovation work on the property and building.
The big risk in renovation work before Form 4
In conclusion,
Handing over a building without Form 4 is a move that should be avoided. Bodily or property damage that occurs in the interim period between handing over the key and receiving the final occupancy approval form may fall between the chairs and onto the shoulders of the tenants and/or contractors/developers.
While there are certain insurance solutions that can reduce exposure if there is no choice, it is best not to resort to them. In any case, it is advisable to consult with the entrepreneur's legal advisor, who specializes in the subject and is knowledgeable in the field beyond his or her knowledge.
מסירת מבנה ללא טופס 4 היא מהלך שרצוי להימנע ממנו. נזקי גוף או רכוש שייגרמו בתקופת הביניים בין מתן המפתח לקבלת טופס אישור אכלוס סופי עלולים ליפול בין הכיסאות ועל כתפי הדיירים ו/או הקבלנים/היזמים.
יש אמנם פתרונות ביטוחיים מסוימים שיכולים לצמצם את החשיפה אם אין ברירה, אך כדאי שלא להידרש להם. כך או כך רצוי להיוועץ בנושא עם היועץ המשפטי של היזם, שמתמחה בנושא ובקיא בתחום על בוריו.
