“Ilan, prepare a force majeure letter. To the renovation contractor, to the buyers, to everyone. I'm freezing the project until things calm down here.”
Guy called me the morning after the night the skies closed. In the background I could hear the news on, and his voice, the voice of a man who hadn't slept, half of whose mind was in the mamad (the reinforced safe room) and the other half in Athens.
Guy is an experienced real estate developer. He did several successful projects in Israel, and about two years ago he identified an opportunity in Athens: an old apartment building in an awakening district, which he bought in full in order to renovate from the ground up and redivide it, turning large, outdated apartments into small, modern units, of the kind the Athens market is looking for. A model he knew well from Israel, only with more attractive numbers.
At the time of the escalation the project was in full swing. A Greek renovation contractor was working inside the building on a milestone payment schedule, some of the units had already been sold on paper, to Israeli and European buyers, with signed delivery dates.
Then the escalation with Iran broke out.
Flights were canceled. Guy's Israeli manager, who was supposed to fly out to supervise a critical finishing stage, was stuck in Israel. Guy's son received a call-up order. Two Israeli buyers called to ask if it was possible to “pause the payments for a moment, just until things clear up.” And Guy himself, like all of us in those days, simply wasn't capable of thinking about anything that lay across the sea.
From his point of view the conclusion was clear: war. Force majeure. Everything freezes, and it's backed by the contract.
I asked him to give me a few hours with the contracts before any letter went out.
I first opened the renovation agreement with the Greek contractor, and went straight to the force majeure clause. The clause was there, nicely worded, completely standard. And it said what such clauses almost always say: a party is excused from its obligations when an external event prevents it from performing them.
Then I asked myself the simple question: what exactly is prevented?
In Athens the sun was shining. The contractor's workers entered the building in the morning as usual. Materials were supplied. No siren sounded within two thousand kilometers of the project. Nothing prevented the renovation from progressing, and nothing prevented Guy from transferring the next milestone payment.
The war was at his home. Not at the project.
I called him in the evening and said a sentence he didn't like to hear: “Guy, your war is not anyone else's force majeure.”
A long silence. Then: “What do you mean? There's a war. I'm in Israel. I'm the developer.”
I explained. The clause doesn't ask what is happening in the developer's country. It asks what prevents performance. And if Guy had sent a force majeure letter now and frozen payments, he would not have been invoking a contractual defense. He would have been breaching the contract. The Greek contractor, who was working as usual and meeting all his commitments, would have been entitled to demand the money, apply contractual sanctions, and in an extreme scenario, climb down from the scaffolding and leave Guy with a dismantled building in the middle: open walls, exposed systems, and units that cannot be delivered. And in a redivision project that is the most sensitive weak point - a building in the middle of renovation is not a property, it is a site. You can't rent it, you can't sell it at a reasonable price, and it burns money every month it stands.
And with the European buyers, who from their perspective had signed an agreement with a delivery date, the picture was similar: our trouble in Israel, real and painful as it was, was not written into their contract.
That was the moment the penny dropped for Guy. He thought he had a safety net, and discovered the net was spread under the project, not under him.
So we did it differently. Instead of a unilateral letter, we opened communication. We explained the situation to the contractor transparently and agreed in writing a short arrangement for the emergency period: an expanded power of attorney for the local representative, remote supervision of the finishing stages, an agreed flexibility of a few weeks at points that required Israeli presence. Payments kept flowing. With the Israeli buyers we built a temporary agreed schedule, by consent, on paper, not a quiet freeze. The renovation did not stop for a single day. Guy managed it for a whole month over Zoom, some of the calls from the mamad.
I think about this story a lot, because it exposes a blind spot of Israeli developers abroad. We live in a country where a “security situation” is a working scenario, not an extreme one. But the contracts we sign abroad are drafted from the project's point of view, and your project, in most cases, sits in a completely quiet place. A standard force majeure clause will not cover you on the day when you, your team or your Israeli buyers are stuck under sirens.
And this can be solved in only one place: at the drafting table, before signing. Define in advance what happens when an exceptional event in the developer's country harms the ability to manage, finance or market. Set extension mechanisms, an authorized local representative, and flexibility in the payment schedule for such scenarios.
If you are developers operating abroad - read your force majeure clause now, and ask one question: if the skies close tomorrow, does this clause protect me, or only everyone else?
Stories are based on real situations, with identifying details changed. Not legal advice.
Translated from the Hebrew original. עברית