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Rabbi Meir Orlian

Halachah Writer, BHI

Restoring the primacy of Choshen Mishpat Under the auspices of Harav Chaim Kohn א"שליט

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לע''נ אריאל יהודה ז''ל בן ר' פינחס צבי נ''י קליין

IS RENT CONSIDERED INTEREST?

Q: Ten years ago, when Reuven could not afford his mortgage payments, his bank threatened to foreclose. His friend Shimon then made a gracious offer: He would pay off the entire loan, and they would transfer the deeds on the house into his name. When Reuven was able to return the amount Shimon paid the bank, Shimon would transfer the house back to him. In the meantime, Reuven would pay rent to Shimon for living in the house, which was now under his ownership. Currently, Reuven is in a position to take out a new mortgage, and he wants Shimon to return the home to him. Is there a ribbis issue with this arrangement? A: If Shimon is not obligated to return the house to Reuven but is doing so out of the goodness of his heart, then there is no issue whatsoever. If, however, according to the original deal, Shimon was required to return the home when Reuven was able to pay back the amount Shimon paid to the bank, there might be a ribbis issue. When a person sells a home (or an object; see Shulchan Aruch HaRav, Ribbis 54) and he tells the buyer, “When I have enough money, I will give you back the money and you will return my house,” the buyer is not allowed to live in the house. Since the seller is able to void the sale at any point, this is not considered a sale, but rather a loan. If the buyer lives in the house during the loan period, he is deriving benefit from lending his money to the seller/borrower, which is ribbis (Yoreh De’ah 174:1&7). In our case, since the original deal between Reuven and Shimon allowed Reuven to buy back his property at any point, the money he received to pay off the mortgage is considered a loan, rendering the rent payments ribbis. Some poskim write, however, that this case depends on the exact terminology used in the original deal. If Shimon agreed to void the sale when Reuven returned the money, or if Reuven said, “When I return the money, you’ll return my house,” that turns the transaction into a loan, not a sale, and the rent is ribbis. But if they stipulated clearly that they are not nullifying the original sale – rather, they made the original sale conditional on Reuven’s right to buy back the house – then the resale of the house to Reuven is a new transaction. In fact, the need for a new sale actually bolsters the finality of the original sale. Since the house was truly Shimon’s during the interim, the rental payments were not ribbis (Chavos Daas 174:1; Nesivos 207:6; Noda B’Yehudah Tinyana, Yoreh De’ah 75, cited in Pischei Teshuvah 174:1). In our case, if the original condition was that Shimon would sell the house back to Reuven, there is no ribbis issue

according to these poskim. Nevertheless, later poskim write that since this sale wasn’t final in the sense that Shimon could not do as he pleased with the house – for instance, he could not sell it to a third party – it is still akin to a loan. It would be best, therefore, to write a proper heter iska before setting up such a deal (see Mishnas Ribbis 14:7; Chelkas Binyomin 174:7). Clearly, however, if the parties were not careful to phrase the sale contract properly, and Shimon agreed to return the house (i.e., not to sell it back) when Reuven had the money, then the rent paid in the interim is ribbis. [The fact that the deeds were under Shimon’s name for those ten years does not seem to change this halachah, because this happens even in cases of loans to protect the lender.] The same logic applies to another situation that commonly arises nowadays. Gemachim that lend out items – medical equipment, or sefarim, for example – often ask for a monetary security deposit from borrowers. Even if they claim that they are “selling” the object to the borrower/buyer with the rights to return for a full refund, because the deposit is actually considered a loan, the borrower/ buyer’s use of the item is considered a benefit derived from the loan, which is ribbis (Mishnas Ribbis 14:[2], cf. Seder Haribbis [Schimmel] p. 268). There are two ways to avoid this problem: If the gemach is not allowed to use the money in the interim, then it is clearly a deposit, not a loan. If the gemach doesn’t return the full deposit, but withholds the fair-value use of the item, then the transaction becomes a rental, with the amount deducted serving as the rental payment. This payment must be deducted before the return of the deposit. It does not help for the borrower to pay for the use of the item after receiving back the deposit, because ribbis al menas lehachzir (charging interest on condition that it will be returned) is also prohibited (Shulchan Aruch 174:5). M

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