Rent Reduction?
Sally and Jonathan rented a five-bedroom home from David to satisfy the needs of their growing family. After the first two years of rental, immediately after signing a contract for a third year, a water leak developed in one of the bedrooms. The dripping leak partially extended to a second bedroom and after only a short while the entire upstairs reeked of mildew. Without delay, David instructed the couple to provide entry to workers to correct the problem. However, due to complications that included locating the multiple sources of the problem, along with the need for outdoor repairs during the height of the winter, it became evident that the process would be difficult and lengthy. Sally and Jonathan informed David that they were reducing the amount of their monthly payments from the time the leaks began until the problem is corrected. In Bet Din, David refused to lower the rent and countered that if the couple wishes, they can move out of his home and he will reimburse them with all the rent paid since the beginning of the episode. If, however, they choose to stay, David expected to be paid the price of the rent in full, as stipulated in their contract. David, by his own initiative, forwarded a check to our Bet Din, paid to the order of the couple, covering the full cost of rent with an additional amount for the time period required for the couple to move. Sally and Jonathan rejected David’s offer, claiming that they were unwilling to move and they reiterated their right to a rent reduction.
Is David required to reduce their rent? How should the Bet Din rule and why?
Torah Law
According to the ruling of the Shulhan Aruch, a landlord is required to repair and restore structural and interior damage of his property for the duration of his tenant’s term of residence. A damaged roof, leaky pipes, gutter replacement, or a broken boiler, are only some of the common repairs that are the landlord’s responsibility.
If a landlord is negligent and fails to repair substantial damage in a timely manner, a Bet Din will evaluate and adjust the price of rent to reflect the true value of the damaged property. Hence, from the time the tenant notified the landlord of the damage sustained until it is repaired the rent is reduced.
In instances in which the damage is minor and rent reduction is not applicable, a Bet Din is likely to instruct a tenant to apply a portion of his upcoming rental payment to pay for the repairs. Since the landlord is either deliberately or negligently delaying the necessary repairs, the tenant is instructed to withhold the rent and fix the damage.
If, however, the landlord was scrupulous and tended to his damaged property in a timely manner, the tenant is not necessarily entitled to a reduction in his rent. Since the home was first transferred to the tenant’s possession while in good working condition, and the damage was unanticipated by the landlord, it is viewed as a standard turn of events attributed to the misfortune of the tenant.
As mentioned, this is strictly in instances in which the landlord or his representative tended to the necessary repairs in a reasonable amount of time after notification of the damage.
In the event a chronic problem arises, such as mold or the like, a tenant may claim that the property is not fit for residency, and he is entitled to breach his contract. Alternatively, if the chronic problem is limited to a specific area of the property the two can agree on a reduced rental payment to reflect the true value of the property in light of the current chronic issue.
If they are unable to agree on an adjusted rental rate, the tenant reserves the right to breach his contract and move out of the property. The tenant does not have the right to demand that the landlord reduce the rent indefinitely or for the duration of his contractual term. As mentioned, he maintains the right to breach the contract and move out.
This ruling is further applicable when the landlord willingly returns all collected rent for the duration of the time his tenant struggled with a chronic issue on his property. Even more so, the above ruling is applied if the landlord provides an additional amount to his tenant to assist him with the cost of moving. Hence, in such an instance the tenant is not entitled to demand a rent reduction..
Verdict: False Alarm
Our Bet Din ruled in favor of David, the landlord. Since David scrupulously tended to the leaky roof, he was not required to return or reduce the cost of rent as per his tenant’s claim. Since David provided Sally and Jonathan with a property in good working condition, the painstaking interim until the roof is fixed is attributed to the misfortune of Sally and Jonathan.
Even if the damaged roof proves to be a chronic problem, making the home unfit for use, David countered by depositing all the rent he collected from the couple with our Bet Din. Hence, while Sally and Jonathan maintain the right to claim breach of contract and move out, they do not have the right to insist on staying at a reduced rental rate.
In the end, the leak proved not to be a chronic issue as feared from the onset, as the repairs were completed in approximately two weeks’ time. Hence, as mentioned in Torah law, Sally and Jonathan were not entitled to breach their contract, nor were they entitled to rental compensation. Nevertheless, David, on his own initiative and as a gesture of goodwill, agreed to exempt the couple of one week’s rent.
In Loving Memory of Vera Bat Carol, A”H
YOU BE THE JUDGE
Undefined Terms of Employment
Stan, the owner of a childrenswear company, needed funds to further develop his business. Additionally, he was searching for a popular brand name to help market his product. He approached Jack and offered to sell him 50 percent of the shares of his business in return for a cash investment, and the exclusive rights to use Jack’s privately owned brand name for his childrenswear products. Stan and Jack agreed, and the venture was underway. However, some three years later, Stan was unable to turn his company around, and although there were no substantial losses, no profitable income was generated. Stan then opened, with Jack’s consent, a sock division in Jack’s accessory company, selling socks with the same name brand. The division was a huge success, and after only its first season it was evident that the company was on course to net substantially. Stan requested Jack advance him payment against his share of the profits as an equal partner. Jack refused, claiming that Stan was not a partner in the sock division. Jack explained that as opposed to the childrenswear company, which was owned and operated by Stan, the sock division was not. The finances, overseas contacts, design team, and warehousing were all his sole responsibility. According to Jack, Stan was acting merely as a commission salesman with a base salary. Stan counter-claimed, that before he founded and launched the sock division, he verbally confirmed with Jack his role as a 50 percent partner. Jack responded that he does not recall any such conversation. Stan insisted that he invested time and energy like an owner, and he is unwilling to accept terms that do not compensate him accordingly.
Is Stan a partner in the sock division or a commission salesman? How should the Bet Din rule and why?