From the Rav’s Desk: Outbidding a potential tenant on a rental property

1. Question: [Wednesday, 5^th Menachem Av, 5781]

I’m looking to rent out a condo that I own in ???? and was in correspondence with a certain potential tenant who was seriously looking into closing the deal, and while we were pretty much ready to sign the lease agreement we have yet to do so. Now, another person recently called me who was very excited about the property and willing to pay 10% more than what I am asking in order to rent the property. Am I obliged in any way to go through with the rental to the first potential tenant, or may I choose to close with this later prospect from whom I will receive more money? I do feel a little bad dropping the first tenant in middle, but business is business as they say, and would just like to know if there is any halachic issue. Both potential tenants are Jewish and Frum, if that makes any difference.

Answer:

If both you, the landlord, and the potential Jewish tenant have already agreed on the price of the lease and its details and have in essence decided to sign a rental contract, but have simply not done so due to some external reason [i.e. did not yet have the time], then you may not rent it to the other person even if they offer you more money, and it is actually forbidden for them to offer you more money in such a case, or to at all ask you to rent to them instead of the other person. If, however, there are still details and conditions of the rental that you and the potential tenant have yet to agree on, then technically it is permitted for you to rent it to another person, although practically one should not do so. In the event that you are renting the property for much lower than market value, then the law above may change, and it may be permitted for you to rent to someone else, and a Rav is to be contacted with the details.

Explanation: The Talmud and Poskim state that one who purchases an item which another Jew was trying to purchase is considered a Rasha. This prohibition is due to the concept of “Ani Hamechazeir Behararah,” and is under question whether it is a biblical or rabbinical prohibition [although from Admur it is implied to be Rabbinical]. Rabbeinu Tam writes that this prohibition applies also to a rental property, that if one is trying to rent a property and another person comes along and circumvents him and rents it in his stead, then he is called a Rasha, and so is the final ruling in the Shulchan Aruch. However, the Rishonim stipulate this to only apply if they already agreed upon the sale price, however, if they did not yet agree upon a sale price, then there is no prohibition involved, and so rules the Rama and Admur. Accordingly, it is clear that if the landlord and tenant have already agreed and worked out all the details of the rental and are ready to sign the agreement, then even if for whatever reason they have yet to do so, it is forbidden for another person to try to rent it even for a greater price, and likewise it would seemingly be forbidden for the landlord to back out and rent it to that person [due to Lifnei Iver]. If, however, they have yet to agree on the rental price, then from the letter of the law it is permitted for the landlord to rent it to someone else. Likewise, even if they have agreed on the rental price, but have yet to agree on the details of the rental and therefore are not yet ready to sign the agreement, then from the wording of Admur it is implied that it still remains permitted for someone else to come along and rent it. Nonetheless, it is proper to be stringent even in such a case being that some Poskim rule that even if they have yet to agree to the price, so long as he still remains interested in the purchase, then it is still forbidden for someone else to come along and try to outbid him. Furthermore, some Poskim rule that there is a Cherem of Rabbeinu Gershom that prohibits circumventing or outbidding a potential renter of a house even if they have yet to agree on the price, even if the owner is a gentile [and seemingly certainly if he is Jewish]. Hence certainly in the above case one is to be stringent to rent it to the original prospective tenant even if they have yet to agree on all the details of the rental, and certainly if they have already agreed on the rental price and merely need to work out a few details.

Sources: See Admur Hilchos Hefker and Hasagas Gevul Halacha 10-11 [writes Ein Mechusarin Ela Kinyan, which implies that even if a price was agreed upon, it is not considered Pisuk Damim if they have yet to agree on other details of the sale; also implies that the prohibition is only Rabbinical]; Michaber and Rama C.M. 237:1; Tur C.M. 237:1 and in name of Rabbeinu Tam regarding rentals; Beis Yosef 237; Kiddushin 59a; Perisha 237, brought in Pischeiy Teshuvah 237: 3 [prohibition applies even if did not settle yet on price]; Smeh C.M. 237:2 and 7; Tosafus Bava Metzia 10a; Shut Maharashdam 224 [that for second year of rental is considered like Pisuk Damim even before discussing]; Shut Maharam 277; Mordechai Bava Basra Remez 551 regarding Pisuk Damim; Maharam Padva 41 regarding Cherem; Maharik 132;  Tzemach Tzedek C.M. 37-1; Pischeiy Teshuvah 237:2 and 3; Halacha Pesuka C.M. 227-240 p. 386; Pischeiy Mishpat  237 footnote 9 p. 156; Imreiy Yaakov [Klein] 237:11 footnotes 49-53 [Infers from Admur that aside for the price, the other details must also be finalized]; Pischeiy Chosehn [Bloy] 9:14 and 16 footnotes 32  [see there regarding if the prohibition is also on the seller] and footnote 37 [aside for the price, the other details must also be finalized]