The Case
Benny rented Alex’s home every summer for the past three years. In preparation for this year’s summer rental, they verbally agreed on the cost of rent for the 2026 season. Alex then sent an email request to Benny for a $5,000 deposit along with an attachment of a written contract for signing. Benny immediately transferred to Alex’s account $5,000 but did not sign and send back the contract. With only two weeks before the summer season, Benny called Alex just to follow up and was informed by Alex that the house was just rented to another party. Alex explained that although Benny gave a deposit, he never signed the contract. Alex continued to explain that he did not willingly back out of his agreement with Benny, but rather he was unaware that the exclusive agent that rented out his home during the winter was authorized by contract to rent it out for the summer as well. In order not to ruin his relationship with the agent that rents out his home every winter he agreed to rent it via the agent for the summer as well. In Bet Din, Benny claimed that since he put a $5,000 deposit towards the rental he was legally entitled to the home and demanded that the other party be denied access to the property. Furthermore, Benny claimed that upon inquiry regarding the market for a last-minute vacancy available for rent, he found prices to be substantially higher. One property of interest was nearly 25 percent higher than what was being asked for Alex’s home. Benny was vehemently unwilling to release Alex from his commitment to rent him the property unless Alex compensates him for the additional cost of rent due to the need for a last-minute rental.
Is Benny entitled to the property for the summer? Is Alex required to compensate him for the additional cost of a last-minute rental? How should the Bet Din rule and why?
Torah Law
According to the ruling of the Shulhan Aruch, the sale of real estate is viewed as a binding transaction upon the transfer of funds and the signing of the proper documentation. In the absence of either the transfer of funds or signed documentation, both the buyer and seller can potentially renege on the transaction. Notwithstanding, the party that elects to renege in such an instance is subject to various forms of penalty. The degree of penalty is likely dependent on the stage and context of their agreement.
The above ruling is applicable strictly to the sale of real estate. Regarding the rental of real estate, by Torah law, it is sufficient for a tenant to transfer funds to his landlord to execute an effective binding agreement. If, however, a landlord indicates that the rental transaction is not final until funds are transferred and a contract is signed, a tenant is required to comply with such a request to finalize the rental. Additionally, if it is common practice in rental markets that in addition to the transfer of funds, a lease is signed to finalize a deal, thus, the transfer of funds alone is nowadays viewed as insufficient.
Although a buyer or a seller of real estate can effectively renege after the mere transfer of funds prior to the signing of a contract, nevertheless, some halachic authorities impose severe castigation on one who does so. However, many halachic authorities differ and maintain that regarding real estate one is not subject to chastising. In lieu of the above dispute, a Bet Din will refrain from chastising a party that reneges on a real estate transaction when only money is transferred between the parties.
The same is applicable to a rental agreement in which a landlord requires of his tenant to sign a contract to finalize the agreement. As mentioned, in such an instance the transfer of funds is insufficient and does not constitute a binding rental agreement. Hence, if either the landlord or the tenant opts to renege at that point, a Bet Din will refrain from chastising the reneging party.
By rule of the Shulhan Aruch,it is considered untrustworthy to renege on one’s word. A man’s word is his honor, and it is unethical to back out of a deal. A Bet Din, however, does not enforce a party to live up to their word. In the absence of a binding agreement, a Bet Din will not enforce a purchase.
Additionally, if a party was genuinely unaware of a pre-existing situation at the time he gave his word, some halachic authorities waive the responsibility to keep one’s word.
VERDICT: The Last Rose Summer
Our Bet Din ruled in favor of Alex, the landlord, by denying Benny access to the property and rejecting his claim for compensation. As explained in Torah law, since Benny did not sign the contract upon request, the rental agreement was therefore never finalized. Although Benny indeed transferred funds, Alex is entitled to rely on the halachic authorities exempting him from castigation by a Bet Din for reneging on a real estate deal after receiving payment. Additionally, although Alex gave his word to Benny to rent him his property, he was genuinely unaware of a pre-existing arrangement that he had with his broker. In such instances numerous halachic authorities do not view reneging on one’s word as unethical. Nevertheless, our Bet Din suggested that Alex conduct himself honorably and offer Benny some compensation for his anguish. Alex complied with our suggestion, and peace was somewhat restored between the two friends.
In Loving Memory of Vera Bat Carol, A”H
YOU BE THE JUDGE
MILES AWAY
Robert successfully accumulated 420,000 miles on his credit card and sold the miles to Simon for $5,000. Simon, a mileage broker, then sold the miles to Lewis, a well-known travel agent. Lewis issued a ticket to his customer using the miles, but he thereafter cancelled the order since he accidentally misspelled the customer’s name. The airline first deducted 420,000 miles when Lewis issued the ticket, only to thereafter credit the account upon the ticket’s cancellation. When Lewis reissued the ticket with the proper spelling, he again used the miles available in the account for the purchase. His customer successfully traveled using the ticket he purchased from Lewis. Much to everyone’s surprise, the airline did not deduct the points from the account after Lewis reissued the ticket. The three contacted our Bet Din, each claiming ownership of the 420,000 miles still in the account. Robert suggested that as the account holder he is clearly the owner of the miles. After all, he performed his end of the deal by giving access to his account to purchase a ticket with his miles. He claimed that since the process does not include the transfer of the miles to a different account, the balance in his account is his property. Simon and Lewis argued that since they paid for the miles in advance, they were the owners of the miles even though the miles were in Robert’s account. The parties expressed that returning the miles to the airline was not an option, as miles can only be deducted by issuing another ticket.
Which of the three is entitled to the miles?
How should the Bet Din rule and why?