The Case

Amy was recently widowed and was financially struggling to pay her monthly rent. Although her son-in-law was very affluent and provided her with most of her financial needs, Amy chose to sublet bedrooms in her apartment to young ladies studying in a nearby school. The income generated covered nearly half of the monthly rent and Amy actually enjoyed the company of some of her new tenants. Nine months thereafter, Joe the landlord first discovered that Amy had sublet his property. He immediately sent notice to Amy that her sublet arrangement was a material breach of their contract. Joe demanded of Amy to forward to him all the proceeds of the sublet arrangements of the past nine months, in addition to the rent she already paid. Joe explained that Amy had no legal right to sublet his property, making him entitled to all revenue collected in the interim. Amy defended that she was forced to earn the additional income as there was no other way for her to cover the rent. Joe responded that Amy traveled on three costly vacations since her husband’s passing and he does not believe that she lacks access to funds. Joe added that if Amy cannot afford the rent then she is to move out immediately and rent a cheaper apartment. He claimed that the material breach of contract is grounds for eviction and if she cannot “afford” the rent then he will evict her.

Is Joe entitled to the sublet proceeds? Can he evict Amy from his apartment? How should the Bet Din rule and why?

 

Torah Law

According to the ruling of the Shulhan Aruch a tenant who illegally sublets a property is required to forward to his landlord any additional income earned above the cost of his rent. The underlying reasoning behind this ruling is that since the tenant is restricted from renting out the property to another, the landlord assumes ownership of the new lease upon the tenant’s vacancy of the property. In short, once the original tenant vacated, the property is once again available to the landlord as a source of income. In instances in which by contract a tenant has the right to sublet, he is entitled to all revenue earned. Since the tenant purchased all forms of usage of the property from the landlord, he is entitled to profit on the landlord’s property.

The above ruling is applicable to instances in which a tenant vacates and illegally sublets a property. If, however, the tenant remains on the property and illegally shares the property with another, the law varies with regard to profits he collected above the cost of rent. Since the tenant remained on the property, the property was not physically available to the landlord to generate a source of income. In such an instance, just as the landlord has the right to restrict the tenant from unauthorized occupancies, a tenant occupying the property can restrict the landlord from additional tenancies. Hence, after the tenant collected rent from his guests, the landlord is not necessarily entitled to his tenant’s earnings.

Furthermore, the tenant deprived himself of his spacious living quarters and shared the property with his unauthorized guests. Denying himself access to areas of the property is arguably grounds to entitle him to collect payment to offset the cost of his rent. By sacrificing usage of part of the property, the money collected by the tenant is not viewed as profit, but rather as compensation for his inconvenience.

Although a tenant who shares a property with an unauthorized tenant ultimately causes the landlord a loss because of the additional wear and tear sustained to the premises, nevertheless, this does not entitle the landlord to additional rent proceeds. Most contracts protect a landlord and require a tenant to restore the property and return it to the landlord in the same condition it was received, hence, upon termination of the lease the property value will ultimately be restored by the tenant.

Notwithstanding, a tenant who illegally sublets part or all of a property is in violation of Torah law. Deliberately violating the terms and conditions of an agreement is a severe offense which is grounds for eviction.

Upon submitting a ruling, a Bet Din will not consider the financial status of the litigants, nor their level of Torah observance, or any other factor not directly related to their legal claims.

 

VERDICT: No Double Dipping

Our Bet Din ruled in favor of Amy by exempting her from making any additional payments to Joe, her landlord. Notwithstanding, Amy violated the terms of her contract and was subject to eviction. As mentioned in Torah law, since Amy was actively Joe’s tenant, Joe did not have access to the property and is not entitled to more than the rent he agreed upon. Amy, on the other hand, deprived herself of more spacious living quarters and merely collected compensation for her inconvenience. Although Amy acted illegally by inviting unauthorized tenants, in hindsight she did not profit from the venture but rather forfeited convenient living space in order to offset the cost of her rent. As per Amy’s contract, she was required to restore the property to Joe in the same condition she received it, making the additional wear and tear caused by the unauthorized tenants not a present financial consideration.

As per Joe’s request, our Bet Din instructed Amy to immediately terminate all future tenancies if she wishes to continue renting the property.