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Beit Midrash Family and Society Basics of Financial Laws

Breach of Tenancy Agreement

The prosecutor claims that the tardy rental fee payments constitutes a fundamental breach of contract and hence seeks its nullification. He further demands rental payments for the period of time that the defendant subleased the room to a third party.
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The following decision was recorded by the Rabbinical Court next to the Jerusalem Rabbinate.

Case Description:
The prosecutor leased an apartment to the defendant. The defendant, on a number of occasions, was late in paying his rental fee. Moreover, he subleased (with the permission of the prosecutor) one of the rooms in the apartment to a third party, to be used as a laundry. The agreement was that the defendant would pay for the sublet room "as he deemed appropriate." In fact, the defendant discontinued payments for the room after one month, though he continued subleasing the room. It is worth noting that the third party was generally accompanied by an additional company worker whose responsibility it was to oversee financial matters. On the last occasion, when the dismissed worker took away all of the equipment, this second employee was not with him.

The Claim:
(a) The prosecutor claims that the tardy rental fee payments constitutes a fundamental breach of contract, and he therefore seeks to nullify the contract between himself and the defendant; if the defendant is interested in continuing to rent the apartment, the two of them must write up a new contract. (b) The prosecutor demands rental payments for the period of time that the defendant subleased the room to the third party.

The Decision:
(a) If it was evident that the prosecutor rented because he was in need of punctual rental fee payments, tardy payments are sufficient grounds for nullifying the contract. (b) When the defendant made his one rental payment for the sublet room, he effectively revealed his intention as to the sum he "deemed appropriate," and this sum was rendered an integral part of the rental fee.

The Rationale:
The Talmud discusses (Bava Metzia 77b) a case in which one person sells his field to another but the buyer only pays a portion of the price. The seller proceeds to hound him for the remaining sum. Under such circumstances, says the Talmud, the field was never truly purchased.

Rashi explains that the fact that the seller must constantly demand payment from the purchaser proves that the former sold the field because he was in need of money, and he did not have this tardy payment in mind when he sold the field. In our case, it is clear that the prosecutor only leased the apartment in order to pay his mothers' nursing home fees, and that for this he needed prompt payments. Hence, late rental payments effectively nullify the contract.

The Nimukei Yosef explains (Bava Kama 9a in the pages of the Rif) that in the case of a tenant who subleases, there is a difference between subleasing with consent and subleasing without consent. When it comes to subleasing without consent, the rental payment obviously goes to the landlord. However, regarding subleasing with consent, the Nimukei Yosef writes that it is clear that the rental payment goes to the tenant.

He gives two examples of subleasing with consent: (a) where the landlord makes an explicit condition with the tenant allowing him to sublease, and (b) where the sublessee (the third party) has no more household members than the tenant, for in such a case the law allows the tenant to force the landlord to lease to somebody else---.

The Rama (Choshen Mishpat 363:10) cites the Nimukei Yosef, but only brings his second example. Perhaps he holds that only when the tenant has a lawful right to sublease does he receive the rental payment; if the right is granted him by virtue of an agreement, the rental payment goes to the landlord. In our day the accepted practice is to forbid the tenant from subleasing without explicit permission from the landlord.

It follows that the question of rental payment going to the tenant or the landlord depends upon how we understand the words of the Rema: Does or does not the rental fee go to the landlord in a case where the tenant is permitted to sublease by virtue of the landlord's consent? Though the Ktzot HaChoshen (ibid. 8) appears to hold like the Nimukei Yosef, the religious court ruled that this issue is undecided.

In our case, because the defendant possesses the right to the rental payment, it is impossible to take this from him. However, because the prosecutor made a condition with the defendant that should he desire sublease a room he will need to add to the rent, the tenant possesses no right of lease; rather, this right is pending - if he keeps his word and presents added rental fee to the prosecutor, he will receive the right, and if not, no. Since, in the end, the defendant did not pay the prosecutor for the right to sublease, it follows that he lost this right. Therefore, even according to the Nimukei Yosef, the rental fee for the room which the defendant subleased must go to the prosecutor.

Regarding the estimation of the rental fee, the Mishnah states (Bava Metzia 83b) that in a case where the parties do not explicitly state the amount, we go according to local practice. The Rif writes that if there are a number of rent rates, the landlord must go according to lowest of them because of the rule that "a person who wishes to remove something from somebody else's possession must bring proof [that it in fact belongs to him]."

In our case, seeing as the parties agreed that the defendant pay "as deemed fit in his eyes," it is obvious that everything depends on the good will of the defendant, unrelated to the accepted local rental fee in similar cases. However, because the defendant revealed the meaning of the term "fit in his eyes" which appeared in the contract, it became clear that this amount was binding and that he was obligated to pay it just as he was the rent fee appearing explicitly in the contract. Of course, if the prosecutor collects the rental fee for the room directly from sublessee, he must deduct a portion of the amount which he collects from the defendant.

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