Shabbat Parashat Shoftim | 5769
Ask the Rabbi: Compensating for losses due to interest
Question: My son is buying a house and I said that, please G-d, I would give him a present of $10,000 (= $10K) to help, but he now needs another $20K to complete the transaction. He is unable to get commercial financing, but I am. I understand that it is forbidden for me to take a $20K loan in my name and have him pay the bank the interest or reimburse me. (Correct?). May I, instead, reduce the $10K present to compensate for the losses on the $20K loan, considering my pledge of the present was just an oral statement?
Answer: First, let us praise you for the halachic sophistication of the question. Indeed, there is an apparent prohibition for your son to pay the interest on a loan that you will take and transfer the money to him (Shulchan Aruch, Yoreh Deah 168:1). This is because actually two loans will exist. The bank will give you $20K. Then you will be lending your son $20K, and he will return to you $20K plus interest, which is forbidden whether he pays it to you directly or to the recipient of your choice (e.g., the bank). (There is a possible avenue of leniency if matters can be arranged so that it is not viewed halachically as his paying you interest but reimbursing the expenses you incur to getting the money for him. We have an unpublished tentative leniency along those lines, but the conditions are complicated enough that we prefer providing simpler solutions.)
First, we will deal with your excellent suggestion. Not only is it forbidden for the borrower to give money beyond the principal to the lender but it is forbidden for the lender to receive from him any extra service or benefit of even moderate value. A borrower certainly must not be mochel (relinquish rights to) money due to him from the lender in appreciation for the loan (see Bava Metzia 64b). The question is how to view the pledged $10K present.
If one pledges to give a present to someone without doing an act of kinyan that concretizes the pledge, he cannot be compelled to honor his pledge. However, if it is a small present, he is considered to be mechusar amana (lacking in trustworthiness) if he does not do so (Bava Metzia 49a). Since authorities may take some steps to pressure him to fulfill this moral obligation (see Pitchei Choshen, Kinyanim 1:1), if the projected recipient waives the payment, this is considered doing a favor of monetary value. However, $10K is not a small present. (The determination of big and small is likely subjective (B’tzel Hachochma V, 158) and should depend not only on the giver’s wealth but also on the level of his relationship with the recipient. However, your question implies that a $10K present to your son is something that you do not take lightly.) If you have no obligation to pay, then even if you would have been embarrassed to back out, your son’s forgoingof part of the present to receive the loanis probably not considered ribbit (implication of the Chatam Sofer, YD 135 regarding a lender to the community who was exempted from their rotation of taking in guests). If your son is considered poor, there is a problem because a promise of even a large present to an ani is binding as a vow (Shulchan Aruch, YD 258:12).
There are two ways to allow you to receive more than $20K back from your son (allowing you to leave the present). 1) Make a heter iska, the standard solution for framing what might have been a loan into a (partial) investment. Your son will be required to give you profits (according to your written forecast, equal to what the bank is charging) from the investment of $20K on your behalf unless he can bring corroboration that these profits were not achieved. 2) (Somewhat advantageous when the use of the money is known) Write a document whereby the $20K makes you a part owner of the house. Your son’s payments will be a gradual buying out of your partnership plus rent corresponding to your part (Igrot Moshe, YD II 62). For more details about such documents, see The Laws of Ribbit (Reisman), especialy. pp. 259-260, or get back to us.
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