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Beit Midrash Series P'ninat Mishpat

Chapter 14

The Option to Indefinitely Extend a Lease

The defendant (=def) rented an apartment to the plaintiff (=pl). The contract stated that the rental is not governed by the Law to Protect the Tenant. Yet, the contract includes a clause that gives pl “the option” to extend the rental, “each time for a year,” in which case, def would be allowed to raise the rent by no more than 10%. After a year, pl wanted to continue the rental but def wanted to make that conditional on a 35% increase in the rent due to high inflation, seemingly in contradiction to the clause mentioned above. Def says that he did not understand the clause, which, taken literally, would allow pl to rent indefinitely.
Various RabbisShvat 5768
2841
Click to dedicate this lesson
(based on Halacha Psuka, vol. 38, condensation of Darchei Hora’ah VIII, pp. 222-229)
P'ninat Mishpat (576)
Rabbi Yosef Goldberg
13 - A Landlord's Responsibility
14 - The Option to Indefinitely Extend a Lease
15 - Backing Out of a Rental After Checks Were Given
Load More
Case:
The defendant (=def) rented an apartment to the plaintiff (=pl). The contract stated that the rental is not governed by the Law to Protect the Tenant. Yet, the contract includes a clause that gives pl "the option" to extend the rental, "each time for a year," in which case, def would be allowed to raise the rent by no more than 10%. After a year, pl wanted to continue the rental but def wanted to make that conditional on a 35% increase in the rent due to high inflation, seemingly in contradiction to the clause mentioned above. Def says that he did not understand the clause, which, taken literally, would allow pl to rent indefinitely.

Ruling: Beit din established that the word "option" traditionally gives the renter the exclusive right to extend the rental. The contract, which mentions the relevant laws, demonstrates sensitivity to local practice. The claim of asmachta (an obligation one did not think he would have to honor) does not apply when local practice supports the obligation (Tosafot, Bava Metzia 66a; Chatam Sofer, Choshen Mishpat 66).
The Shulchan Aruch (CM 45:3) sets down a fundamental rule that one may not claim that one who signed a contract did not understand its content even if he does not speak the contract’s language. Thus, def’s claim in that regard is rejected.
The Imrei Yosher (I, 150:2) learns from the gemara (Bava Metzia 103a) regarding a loan of an object for as long as it is usable, that even an open-ended commitment to let someone use his object is binding even without a kinyan to uphold the commitment. However, regarding the Imrei Yosher’s (and our) case, where the matter is not definite but depends on the decision of the other party, an open-ended commitment is not binding without a kinyan. The kinyan of chazaka (acting as an owner/occupier of the property) does not work because the commitment is to take effect only after a year, at which time the original chazaka’s imprint is lost (Imrei Yosher ibid.; see Shulchan Aruch, CM 191:4). The money given was also for the first year, not for the agreement to subsequently freeze the price; it too is lost as a kinyan.
The Imrei Yosher’s assumption that the open-ended obligation is binding is questionable for a few reasons [beyond our scope]. Beit din agrees with the Imrei Yosher that the kinyanim that exist in this case are not valid. Situmta (use of procedures that are accepted as binding in a local society) is not valid here because, given that the contract precludes invoking the relevant law, there is no further local practice.
Given that the maximalist interpretation of the contract is invalid and that there certainly was an intent to include some rights of extension, we will accept the contract so that it allows one year’s extension and assume that the words "each time" were a mistake (see Rama, CM 49:2).
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