A Commercial Rental for a Closed Business – part III | 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 (30.6.20) along with arnona: 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: We have dealt with all of the original points of the claims and counter-claims, primarily siding with pl. Now we will look at the impact of the pandemic.

During 32 days of the time that the business was closed and def was to pay rent, the government-imposed closure prevented such businesses from operating. In general, when use of a rental property becomes impossible due to a makat medina (society-wide plague), the renter is exempt from paying (Rama, Choshen Mishpat 312:17). While this ostensibly indicates that def is exempt for paying for the 32 days, one of the dayanim argued that since def’s decision to not use the unit preceded the closures, def is not entitled to an exemption. The gemara (Bava Metzia 106a) discusses a case of one who rented a field and the area’s vegetation was ruined by infestation, which generally is reason to reduce the rent. The gemara says that if the renter did not plant that season, he cannot gain an exemption because the field owner can say that we treat it as if there was a chance that had he planted, he would have been the exception to the rule. Furthermore, def was not fully affected by a makat medina because he could have used the unit for a different purpose. Also, according to the Maharam Tiktin, we do not exempt a renter for a makat medina when the structure is standing and there is an external reason that affects the renter and precludes him from using it.

However, the majority ruled to give a 50% reduction on these days because of a machloket on the matter. The Rama (Shut 50) posits that if someone improperly reneged on a deal and then a situation arose to prevent its implementation, we say that he became obligated to pay when reneging and does not benefit from the exemption based on the new situation. The Sha’ar Mishpat (333:1) reasons that just because one backed out does not obligate him for a time he would anyway be exempt for. This is especially true of rental, where every day creates a new obligation to pay. The Erech Shay (333:1) argues that the Rama was not referring to a makat medina and might agree in this case. Furthermore. here, def had not removed his furnishings and could have used the unit so that the closure was of significance to him. Therefore a partial exemption is appropriate.