Case: The plaintiffs (=pl) rented out their apartment to the defendant (=def) from 02.2019 until 01.2020 for 2,400 NIS a month with a rental contract. Def was required to pay va’ad bayit payments, which was run by a management company; def did not pay, and pl eventually paid instead. During the year, def made claims of problems with the apartment and pl reduced the rent by 6,000 NIS, allegedly to avoid disputes. At year’s end, pl wanted to end the rental (claiming that def often paid late, was difficult to contact, and did not allow workers into the apartment to fix things). They eventually agreed as a chesed (the apartment def was to move to was not yet ready) to extend the lease for a month with a new contract, which included an arbitration agreement to go to Eretz Hemdah and large penalties for late payment. Def has not paid rent or va’ad bayit for the additional month or any late payment penalties. Pl is suing for payment of rent (2,400 NIS), va’ad bayit (200 NIS), and penalties (11,000 NIS for rent and, if possible, 11,000 NIS for va’ad bayit). They cannot sue for last year’s va’ad bayit because it is not included in the arbitration agreement, and def refuses to give beit din jurisdiction. Def deflects culpability for lateness during the year and is, in theory, willing to pay for the month’s rent, except that he claims to be in the midst of bankruptcy proceedings. Def claims to not be obligated to make penalty payments because pl relinquished rights in return for def’s promise not to tell potential renters about problems with the apartment. He also says a mistake in the paragraph about late payments renders it ineffective. He claims not to owe va’ad bayit, as others in the building refused to pay because of the bad job the company did.

Ruling: In addition to the rent def admits to, def also owes va’ad bayit. He did not substantiate his claim of grossly lacking service, nor did he provide any evidence that others withheld payment (pl brought evidence to the contrary). It makes no difference that the contract refers to a va’ad bayit of residents and in practice it was done by an external company, as contracts are to be understood in context, not by illogical literal readings.

The claim that pl waived their rights to late payment are unsubstantiated. During the first year, payment was "guaranteed" by checks, which were not given for the extension and were replaced by the pressure of looming penalty payments. In any case, the claim of mechila requires a migo of another claim (Shach, Choshen Mishpat 75:22), which def lacks.

The claim that the paragraph on late payment is invalid is incorrect. Obvious mistakes in a contract, when the intention is clear, do not invalidate a provision of a contract (Rama, CM 49:2). Beit din can allow late-payment penalties because the contract employs a heter iska. However, this is to be applied only when the payments are representative of the grievousness of the late payment, and a debt of a few thousand shekels must not turn into one of tens of thousands in a short time. Therefore, beit din is setting the late payment for everything owed at an additional 2,100 NIS, which includes estimated waste of def’s time and patience