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based on ruling 79099 of the Eretz Hemdah-Gazit Rabbinical Courts

A Loan or a Partnership? – part II

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Beit Din Eretz Hemda - Gazit

Av 18 5781
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: [We saw last time that the "document" was not a binding agreement.]

According to one dayan, regarding the question of how much pl received as repayment of the loan, we cannot conclude that more than 220,000 NIS was given, as def has no proof he returned more. However, the majority rules that since we only know that def received 270,000 NIS in the first place based on his admission, he is to be believed that he paid back all of it, and only needs a minor oath to confirm it. In lieu of such an oath, which we do not administer in our days, def should pay a third of the money in question (16,667 NIS).

If def is correct about the nature of the payments, the rent was ribbit ketzutza (a full violation of ribbit, if, as here, it was mandated from the time of the loan), which a creditor needs to return even after already receiving it. In this case, 216,000 NIS was paid in that manner. According to one dayan, since time has gone by after the payments stopped and still def did not demand the money back, we can assume he was mochel (relinquished rights), which is effective (Shulchan Aruch, Yoreh Deah 160:5). According to the other dayanim, one cannot employ mechila here because def was not aware that he had the right to demand the money. In any case, we could not extract the money, because there is no proof that the money was given as an interest-based loan, as it could have been a partnership. Since we are treating the situation as an unproven doubt, where the one holding on to money keeps what he has, pl is unable to claim rights to half of the house, and def is unable to receive in return the rent/ribbit payments.

In terms of bottom line, then, def must pay pl 16,667 NIS for possibly outstanding return of the basic loan.
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