A Big Real Estate Developer Goes Under

Last week, Heftsiba, one of the largest developers in Israel may have gone bankrupt. I say may have, because they haven’t officially filed for bankruptcy, but the signs seem to be very apparent.

As it turns out, our new apartment is part of one their development projects. So, although we (or, actually, our landlord) are much more fortunate than many of our would be neighbors, we will feel some of the effects of Heftsiba’s financial woes.

Our new apartment is one of 58 apartments in a 22 floor tower. And our tower is one building within a 6 building complex at the entrance of an area of Jerusalem between Ramat Rachel and Bethlehem, called Har Homa.

Our tower is about 60% occupied, and the other 5 buildings in our complex were 0% occupied. I say “were” because on Thursday morning before security arrived, people started taking up residence in apartments they had purchased from Heftsiba. (News of the potential collapse of Heftsiba started circulating late Wednesday PM and throughout the night.) Even without water and electricity, they were staking their claim, attempting to show residence, which means the developer has to go to court to get them out. From what I overheard down on the street, the “squatters” were trusting that their receipts of payment and technically residing in the building would save their large financial investment, which in some cases was more than $300,000.

It’s a complicated issue to understand, particularly for an outsider, but from what I understand, those who haven’t formally received the keys to their apartments, will most likely never get possession of those apartments even though they have paid for them. In Israel, receipt of the keys is the formal process of transferring ownership from the developer to the buyer.

In an effort to show sympathy for their plight and to find out more information, I have gone down and circulated among the most effected people on a number of occasions. I’ve been able to talk with a few of them and even meet some of the greatly relieved tenants of our building, all of whom have said with a sigh of relief, “Just last week we got our keys.”

As a result of this new development, some of the promised amenities for our building will apparently not be realized. We have three elevators in our building, but only one is open. I’ve been told that the other two will not be opened now. Apparently, the planned fitness center will not be completed either. Finally, the dues to a general building fund for upkeep of the building may increase since the original amount was based on a certain number of occupants, which apparently will not be realized now. That may mean an increase of about $75 per month for us, but that is yet to be determined.

I feel kind of weird even mentioning these things because they are, at most, mere inconveniences for us. And nothing compared to those who haven’t received their keys and may have lost everything.

You can read some of the local (English) press reports on this story at:

According to this JPost report, Bank HaPoalim (our bank) is going to ask the court to release all of Heftziba’s assets to the bank. Additionally, they may try to faciliate the completion of the various building projects, which may be good news for all parties concerned.

More from Ha’Aretz.

This JPost article gives a better explanation of the process, though, they mention a 15% deposit, which doesn’t match the numbers I’m getting from the would-be homeowners in our neighborhood.

This Ha’Aretz article offers some good news for those who haven’t yet received their keys.

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