A Loan or a Partnership? – part I | Beit Din Eretz Hemda - Gazit | Beit Midrash

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Case: The defendant (=def) bought an apartment for approximately 600,000 NIS but did not have enough money to pay. The plaintiff (=pl), def’s brother, gave him around half of the price. Def has been paying pl 1,000 NIS a month for the last 18 years and an additional 220,000 NIS (according to pl) or 270,000 NIS (according to def). Pl claims he bought half of "his brother’s apartment" and that the monthly payment was for rent for his half. Now that the apartment is worth 1.8 million NIS, pl wants def to buy his part at 680,000 NIS (half its value minus the amount paid; the monthly rent payments are not included). Def counters that the money was a loan, and the monthly payment was interest. Not being religious, he did not know that interest is forbidden, and so he now demands that pl return the interest, as Halacha requires. Pl presented a handwritten "document," which contains several provisions that support pl’s claims, including that def must pay half of normal rent and that they have equal ownership in the apartment. Pl claims that def wrote the document, and a brother of the two corroborates that this is def’s handwriting.

Ruling: The first thing to determine is the relevance of the alleged document. The note has no signatures or date and uses only first names. It does not even refer to a specific apartment by address or description. The final clause within it is in a different handwriting, which admittedly is pl’s, which shows the lack of reliability of the note to serve as a binding document.

The brother’s testimony about the handwriting and his claim that he discussed with pl being partners in the apartment are the testimony of a relative which is of course invalid. The source pl cited about a relative’s testimony serving as a revelation of known matters does not apply here when the basic facts are in dispute. Furthermore, even if we were to accept the brother’s account, the note is not written in a manner that can be binding. Even if the witness is correct that the two brothers discussed being partners in def’s apartment, that does not mean that def agreed to the arrangement.

There is a manuscript of a recorded conversation between pl and def that refers to the existence of a document of some sort. However, it does not describe the type of document that would be legally binding. Furthermore, the note is full of discrepancies. For example, in one of the clauses, it refers to a loan of $69,000, which based on the exchange rate at that time, is slightly more than 270,000 NIS, which the sides agree was transferred. To be clear, the two sides agree that pl gave def a significant amount of money to buy the apartment and that pl was intended to receive significantly more money than he gave to def. Regarding the exact conditions, we do not have agreement or proof.