A Commercial Rental for a Closed Business – part I | Beit Din Eretz Hemda - Gazit | Beit Midrash

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Case: The defendant (=def), a money changing business, rented a unit from the plaintiff (=pl) on 1.2.17 for 2,900 NIS a month for 5 years, with exit points every six months with three months notification. In Dec. 2019, def closed the business and stopped paying rent. Pl demands rent until the next exit point along with arnona (30.6.20): 20,300 + 2,025 NIS, and that def leave the unit painted. Def responds that he stopped paying rent because pl did not provide a receipt valid for purposes of VAT, as required by their contract. For the 101,500 NIS of rent he paid, def lost 14,747 NIS of VAT exemptions, which pl should pay or should be subtracted from any rent due. Also, the contract allowed to bring a renter in his place, and another money changer had agreed to pay 5,500 NIS to buy def’s furniture, take def’s place (for which def had paid the previous tenant 20,000 NIS), and rent the unit, but pl scared him off. Pl responds that the rental was legally recognized, and he reported payments to the tax authority at year’s end; he does not need to give a receipt. Pl said that he allowed the potential tenant, but only after def would pay the rent due.

Ruling: A contract for a set time is like a temporary sale, and neither side can back out earlier than the stated provisions allow (Shulchan Aruch, Choshen Mishpat 312:1; Shut Harashba I:1028). This is true even if the renter cannot continue due to extenuating circumstances (Shut Harama 20; Shach, 312:2). Therefore, the rental is intact until 30.6.20, and def must pay the full price.

Def said that he does not want to stop the rental but to have someone take his place. However, in our days, subletting is permitted only if the contract allows for it (Pitchei Choshen, Sechirut 4:(22)). This contract permits "bringing in an additional tenant according to these conditions." According to pl, that means that def would remain the renter, but that he could bring in someone to use one of the rooms in addition to him, under def’s responsibility. Beit din accepts pl’s reading of the contract. Since there is no contractual clause allowing def to find a replacement, pl was permitted to make his agreement to such an idea conditional on def fulfilling his financial obligations.

Pl had an obligation to accept a replacement tenant if it did not hurt him, including that the person must be fully acceptable as a tenant (Beit Yosef, CM 312). That potential tenant in this case did not want to get involved as long as there was conflict between pl and def. Upon questioning the litigants, it does not appear that pl put any undue pressure upon the prospective replacement. It was reasonable for pl to not let def off the hook when it looked like he wanted to avoid paying all that he owed.