What Type of Option? | Various Rabbis | Beit Midrash

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P'ninat Mishpat

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The sellers (sel) decided to provisionally move from the yishuv in which they owned a house to a neighboring one and rented out their house to the renters (ren) for at least a year for 2800 shekels a month. Due to a sensitive family background, it was important for ren to have a mix of flexibility and stability, and so they paid higher rent than usual to include a clause in the contract that gives them “the privilege to be first” regarding a rental extension of 2 years, should they inform sel by a certain time. During the year, sel decided to stay in their new yishuv and buy there, and therefore decided to sell the house to a buyer (buy). Buy’s present rental contract is finishing soon, and they need the house to live in at the end of ren’s year of rental. Ren do not want to leave the house for another two years, which they may do according to their interpretation of the rental contract. Sel are willing to return 300 shekels a month, which, they admit, the rental was overpriced (ren claims that they “overpaid” by 500 shekels a month), but sel say that buy have the right to move in after the year. Sel contradicted themselves regarding if ren’s privilege was only if both sides agreed or if they had an outright option but only if sel rent out, not if sel want to return to live there or sell it to someone who wants to live there.

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Based on ruling 77046 of the Eretz Hemdah-Gazit Rabbinical Courts

Case: The sellers (sel) decided to provisionally move from the yishuv in which they owned a house to a neighboring one and rented out their house to the renters (ren) for at least a year for 2800 shekels a month. Due to a sensitive family background, it was important for ren to have a mix of flexibility and stability, and so they paid higher rent than usual to include a clause in the contract that gives them "the privilege to be first" regarding a rental extension of 2 years, should they inform sel by a certain time. During the year, sel decided to stay in their new yishuv and buy there, and therefore decided to sell the house to a buyer (buy). Buy’s present rental contract is finishing soon, and they need the house to live in at the end of ren’s year of rental. Ren do not want to leave the house for another two years, which they may do according to their interpretation of the rental contract. Sel are willing to return 300 shekels a month, which, they admit, the rental was overpriced (ren claims that they "overpaid" by 500 shekels a month), but sel say that buy have the right to move in after the year. Sel contradicted themselves regarding if ren’s privilege was only if both sides agreed or if they had an outright option but only if sel rent out, not if sel want to return to live there or sell it to someone who wants to live there.

P'ninat Mishpat (805)

Various Rabbis

529 - Hallel and Nirtza

530 - What Type of Option?

531 - Expanding Work and Expanding Pay

Ruling: It is implausible that sel needs to agree to a rental extension because it turns the privilege into meaningless and it would make no sense for ren to pay extra for the house. However, the simple reading of the contract clause, which speaks about being "first" and not giving ren an option implies that they are only first among renters. That is a significant privilege that can be worth paying for.

It is pretty clear based on context that ren’s intent was for maximum security, and when there is a contradiction between the language of a contract and its intent, we follow intent (Shulchan Aruch, Choshen Mishpat 61:16). However, we follow intent only when the intent is clear (see Rama, Yoreh Deah 218:1). In this case, while ren expressed (as we see from Whatsapps) their desire for a full option, we see sel wanting to have leeway as well (he was, like ren, trying out a new community). In a case of doubt about how to interpret a contract, we put the burden of proof on the one who wants to use it to change the status quo (Shulchan Aruch, Choshen Mishpat 42:5), which puts the burden of proof here on ren.

If sel wanted to, they could have claimed that they did not have to return the extra 300 shekels of rent for stability because they can claim that they did give security, just not in a way that that helped ren in this case. It is even clearer that sel does not have to pay the extra 200 shekels that ren claimed they paid above the original agreement, as they do not have proof that 2500 shekels would be overpaying.

P'ninat Mishpat