Aftermath of a Rental that Almost Was

Based on ruling 71002 of the Eretz Hemdah-Gazit Rabbinical Courts

Case: Defendant #2 (=def2), a real estate agent, showed defendant #1’s (=def1) apartment in a kibbutz to the plaintiff (=pl). Pl gave def2 a 1,000 shekel down payment for his services and a 2,000 shekel check which def1 could use for home repair that pl had asked for (it would count toward the first rental payment). Pl signed notes stipulating these sums were non-refundable. Def1 sent pl to the kibbutz acceptance committee, which caused a delay because of the latter’s vacation, and finally pl had to go on the day of her sister’s wedding. The next day, def1 informed pl that he would not go through with the deal. Pl is suing for a total of 8,700 shekels because the false expectations caused various damages, including the inability to rent out her own apartment and wasted trips. She also wants back the deposit checks, as pl was not the one who backed out. Def2 returned the 2,000 shekel check in beit din but refuses to return the nonrefundable realtor’s pay, claiming that he did a lot of work to bring the sides to an agreement, and pl knew that nothing was final until she passed the kibbutz’s board. Def1 says that he cannot be obligated in anything since he did not sign any rental contract with pl. The fact that he agreed with def2 to do repairs has nothing to do with pl, as it would have had to have been done no matter who would rent.

Ruling: Def1 is correct that no act of kinyan was done here (the rules of kinyan are the same for renting and buying land – Shulchan Aruch, Choshen Mishpat 190:1). Since pl did not pay money, there also is no semi-curse of mi shepara for backing out. However, even one who backs out of an oral commitment to sell or rent can be liable for Rabbinical displeasure (ibid. 7).

In this case, def1 clearly backed out of an understanding, and the reason was that a friend told him that pl would not pass the board and def1 could lose the opportunity to rent out at that time. These words were likely lashon hara and were in any case not grounds for def1 to back out of a commitment. Therefore, based on our authority to rule not only according to din but also according to compromise, we obligate def1 in direct expenses such as traveling to arrange the rental and the beit din fee (total of 600 shekels). We are not convinced that the other claims relate to definite damage.

Regarding the down payment of 1,000 shekels to def2 for agency fee, this must be returned. Agents are paid only when a binding agreement was reached, and only then can they keep money even if one side broke the agreement. But here there was never a binding agreement, just a moral obligation (this is true according to halacha and obviously true according to Israel’s "Law of Real Estate Agents"). Agents who get a percentage of the sales price do not get paid for effort but for results. One cannot read the contract as making payment nonrefundable for cases where there was never an agreement.