Q&A: Monetary Overcharging in Inflated Rent Pricing
Monetary Overcharging in Inflated Rent Pricing
Question
Hello Rabbi,
Suppose a person rents out an apartment to someone else, and after several years, once the tenant is settled in the apartment, the landlord realizes that the tenant is in a situation where it would be hard for him to move to another apartment (for example, because his children are in educational frameworks that would be hard for them to switch, or because the tenant himself is dealing with health difficulties that make it hard for him to handle an apartment move on top of his medical challenges). The landlord decides to take advantage of the tenant’s distress for his own benefit, and at the time of the upcoming annual lease renewal raises the rent in an excessive way (say, from 5,000 to 6,000 shekels), while knowing that the fair market price for the apartment is 5,000, except that because the tenant cannot afford to move to another apartment he will probably be willing to pay even 6,000 in order not to have to deal with moving. The question is whether such exploitation constitutes theft, or perhaps since in the end this is being done with the tenant’s consent, there is no theft here. Or perhaps only up to one-sixth there is no theft, but from one-sixth and up this would count as theft (as in the law of monetary overcharging).
Best regards,
Answer
There is no overcharging here, since there is no law of overcharging with regard to land. And according to Rabbenu Tam, there is overcharging only at one-half (and not one-sixth). The tenant has no claim against the landlord, and the latter is not obligated to give it to him at the price he wants. And if he agreed to continue on that basis, he cannot later sue for the difference.
But this is certainly an act that is morally ugly and improper to do. Apparently there is also a halakhic prohibition here of price gouging, and this is discussed in the She’iltot and Ha’amek She’elah, parashat Vayigash (regarding Joseph, who bought the land of Egypt for Pharaoh). Apparently there is also a prohibition of overcharging here as well (just not rescission of the transaction).
Discussion on Answer
It seems to me like “driving away a lion”—saving him from having to move apartments. And I don’t think even the law of “one who goes down into another person’s field” applies here (there is no loss and no expense to the beneficiary, and in any case it is also more convenient for him that the same tenant stays).
A popsicle seller at the beach is not comparable, because he makes the effort and brings them there in my place, and sweats as he walks around there carrying the box in order to sell them. That’s what you’re paying for, and that’s completely fine.
“There is no overcharging with regard to land” means that there is no rescission of the transaction, but there may still be a prohibition. However, here he argues the opposite:
https://www.etzion.org.il/he/%D7%91%D7%9E-%D7%A0%D7%95-%D7%90%D7%95%D7%A0%D7%90%D7%94-%D7%91%D7%A7%D7%A8%D7%A7%D7%A2%D7%95%D7%AA
It does not seem reasonable to me. I later saw Nachmanides on the Torah, Leviticus 25:14, who writes this explicitly:
“And the Sages expounded: because Scripture says, ‘And if you sell anything to your neighbor or buy from your neighbor’s hand, you shall not wrong one another,’ we learn that in the laws of overcharging there is a special rule concerning movable property that does not apply to land, namely the return of money; but the prohibition of the negative commandment applies to all of them. Therefore it says, ‘And if you sell anything’ in the plural, referring both to one who sells land and one who sells movable property; ‘or buy from your neighbor’s hand’—this refers specifically to the one selling movable property from hand to hand; and to all of them it says, ‘you shall not wrong.’ And since it singled out and separated movable property, it included in them the law of overcharging, namely the return of payments. And this is correct according to the midrashim that our rabbis received in the hints of the Torah.”
My assumption was that if a person is in distress, then even if he knows the price, it is as though you hid it from him (because he has no ability to make use of that information). Just as causing a sighted person to sin intentionally is placing a stumbling block before the “blind.”
As for the nullification of the prohibition in the modern world, that is true where there is no market price (a popsicle, in a supermarket, at the beach, in a grocery, at a kiosk). But in the rental market there is a fairly fixed price, and at least according to the assumptions you described in the question, my answer still stands.
Incidentally, my assumption throughout is that rental is considered a day-by-day sale, as the conclusion of the Talmud in Bava Metzia 56a states. There is a possibility there that there is no overcharging in rentals at all, but that is not the accepted halakhic ruling.
Regarding what you wrote above: “My assumption was that if a person is in distress, then even if he knows the price, it is as though you hid it from him (because he has no ability to make use of that information)”—is that kind of distress also relevant to monopolies? Meaning, suppose the Coca-Cola company can sell a bottle of Coke for 4 shekels and maintain reasonable profitability like regular companies that are not a monopoly. Would raising the price beyond 4 shekels constitute monetary overcharging? And does this consideration also apply to the level of taxation that the state imposes on citizens (because the state is a kind of monopoly regarding state services)?
There is no prohibition against making a large profit. Someone who has a good product charges a high price. Only when there is a market price does the law of overcharging apply.
For the sake of discussion, if there were overcharging with regard to land, would there be overcharging here? Or perhaps since the tenant is saving the landlord from having to switch tenants, that savings itself is built into the rental price, and so this is actually a fair price? (Like how a popsicle from a beach vendor costs much more than a popsicle in the supermarket, because it saves buyers the trip to the supermarket.)
Regarding the latter part, you said there is a prohibition of overcharging, just no rescission of the transaction. How does that fit with the first part, where you wrote that there is no overcharging with regard to land? And even if there were overcharging with regard to land, why is there overcharging here? After all, there is no concealment of information regarding the fair rental value. The prices are known and open to all. The tenant knowingly agrees to the inflated rent out of considerations of saving hassle. Similar to this, you wrote in another responsum on the subject: “The consideration that one could have checked the price indeed nullifies the prohibition of overcharging, since it is like a stipulation.” You also wrote there: “This prohibition too has almost fallen away on its own in light of the changed circumstances in our modern world.” Here is the link to that responsum:
https://mikyab.net/%D7%A9%D7%95%D7%AA/%D7%90%D7%95%D7%A0%D7%90%D7%AA-%D7%9E%D7%9E%D7%95%D7%9F-%D7%91%D7%99%D7%9E%D7%99%D7%A0%D7%95/