COVID-19 and Cancelled Rental Contracts

The current novel coronavirus (COVID-19) pandemic has had and will continue to have far reaching economic ramifications.¹  Within our communities, there have been many cancelled travel plans, institutional dinners, simchos, and the like.  What does halacha say about a rental contract frustrated by a pandemic?  If someone put down a deposit for a Pesach rental or program and was unable to reach the destination or the program was cancelled, is he or she entitled to a refund?  The purpose of this presentation is to present a framework for understanding the issue and not to draw definitive conclusions.  We will focus on rental contracts and hope to address employment contracts in a later essay.

1. A Tenant Who Dies Mid-Lease

Halacha addresses various instances of how an unanticipated ones (extenuating circumstance) impacts previously agreed upon contractual obligations and which party bears the loss.  In the case of a tenant who dies in the middle of a lease term, Rashba (Shu”t 1:1128) rules that the deceased’s estate must pay out the remainder of the lease.  Rashba views a property rental as a sale for the duration of the lease term (sechirus le-yomei memkar hi). Once the contract is entered into, an ones does not discharge the tenant (or his estate) from the agreement, just as a property sale cannot be invalidated because of an ones that arises after the sale has been executed.

Maharam (cited in Mordechai Bava Metzia 345) disagrees with Rashba’s ruling and rules that the estate is exempt from paying out the rent for the remainder of the term. Maharam views a property rental as more analogous to an employment contract than to a sale, and therefore applies the principle of Bava Metzia 77b (see below) which exempts an employer from paying workers whose job was rendered unnecessary by an unanticipated event.

Rema (Choshen Mishpat 334:1) favors the position of Maharam, although he quotes the Rashba as an alternate position and concludes that if the landlord received the entire year’s rent in advance he cannot be forced to refund it. ^{2 3}

2. The Case of Unexpected Rainfall

The Gemara in Bava Metzia 77b discusses the case of an employer who hired workers to irrigate his field but unexpected rainfall rendered their job unnecessary.  The Gemara rules that, absent a contrary stipulation, and absent a clear expectation that the employer alone (and not the workers) was expected to foresee the ones, the employer need not pay the workers for the work they did not do.

The general principle that emerges from this Gemara (as codified by Rema 334:1) is that absent a contrary stipulation, if the ones should have been anticipated by both the employer and employee equally, or the ones was equally unanticipated, the worker is not entitled to compensation for labor not performed.  If, however, the employer was aware of an impending ones at the time that he hired the worker, but the worker himself was unaware of the ones, the employer is at fault for not conditioning the employment on the non appearance of the ones and must therefore pay the worker.

3. The Boat that Sinks with the Client’s Merchandise

The aforementioned Maharam distinguishes between the case of workers who need not be paid at all in the event of an ones that renders their job unnecessary and the case (Bava Metzia 79; see Choshen Mishpat 311:3) of a wine merchant who hired a boat to transport his wine across a river where the boat subsequently sank in transit. The Gemara there establishes the general principle that the party who is preventing performance is stuck with the loss of the value of the contract.  If the merchant hired a specific boat (sefinah zo) to transport a non specific quantity of wine (yayin stam), and the boat sank together with the wine, the merchant is entitled to a refund, as he still has other wine that he can provide for transport, whereas the boat that he rented is no longer functional. In this case the boat owner prevents fulfillment of the contract. If the merchant commissioned a non-specific boat (sefinah stam) to transport specified crates of wine (yayin zeh), the boat owner is entitled to full payment, as he has other boats that he can provide, but the merchant has no more wine to provide for transport.  If the merchant commissioned a non specific boat (sefinah stam) to transport a non specific quantity of wine (yayin stam), since both parties retain the ability to provide the service and merchandise that they contracted for, they share the loss equally. ⁴

4. The Case of the Sharecropper and Makas Medinah

The Mishnayos in Bava Metzia (103b, 105b) introduce another principle of loss allocation for ones in the context of a sharecropper obligated to pay a fixed quota of produce to his landlord. The Mishnayos rule that even if the field was destroyed or became unusable (e.g. it was destroyed by a swarm of grasshoppers or an unanticipated storm, or the water source of the field dried up), the sharecropper is still responsible for providing the agreed upon amount of produce.  Rashi (105b s.v. eino menakeh)explains that even though the sharecropper could not have reasonably anticipated the destructive event, and would likely not have entered into such a contract had he known that it would occur, the owner of the field can claim that the event was attributable to the sharecropper’s bad mazal, and the sharecropper is still responsible to fulfill his contractual obligations.  However, if the same events affected the majority of fields in the area (makas medinah),⁵ the sharecropper may deduct his loss from his payments to the owner.

Shulchan Aruch invokes makas medinah in the aforementioned cases (Choshen Mishpat 321:1 and 322:1) as well as in the context of property rentals (Rema 312:17) and employee contracts (Rema 334:1).⁶

Examples of makas medinah cited in rishonim include a city that was consumed by a fire (Teshuvos Maimoniyos Mishpatim 27 cited in Rema 312:1), a garrison of non-Jews that take over the majority of Jewish homes in a city (Machaneh Efrayim Sechirus 6), and an epidemic (Machane Efrayim Secherus 7 in understanding Shu”t Ra’avan 98⁷).

5. Makas Medinah and Rental Properties

The rishonim implicitly debate whether a makas medinah that makes a property rental unusable would release the tenant from his rent obligation for the period during which he was unable to reside in the property. Rema (Choshen Mishpat 312:17 citing Teshuvos Maymoniyos Mishpatim 47) rules that if a fire burns down an entire city, which he characterizes as a makas medinah, a landlord is not entitled to collect or keep rent for the days during which the property was uninhabitable.⁸

Does the same apply to a situation in which the house is still standing but may not be easily accessed due to a war or epidemic?

5.1 Ra’avan’s Position

Ra’avan (Shu”t 98) writes that in a situation where the majority of a city’s residents are forced to flee and a tenant is unable to remain in his rented property both parties share the loss equally such that the tenant pays only half of the rent for the period in which he is away.  He suggests that the default rule for makas medinah is to split the loss between the parties.  He even interprets the Mishnah’s ruling in the sharecropper case as holding that the sharecropper can deduct (menakeh) some of his losses in a makas medinah, as opposed to the standard interpretation according to which the sharecropper is fully released from his payment obligation.  Ra’avan further argues that even if one accepts the standard interpretation of the sharecropper ruling, it is different  from the case of the tenant who flees during a makas medinah.  As opposed to the case of the sharecropper whose field flooded, where the makas medinah only affected the field, which was the sole property of the owner, and thus the sharecropper is not liable for his decreased production, when a makas medinah causes the residents of a city to flee both are equally affected – in the words of the Ra’avan, the houses were destined to be desolate and the residents of the city to be exiled.  However, Ra’avan’s opinion does not appear to be accepted by later authorities. ^{9   10}

5.2 Maharam of Tiktin’s Position

Shach (334:3) quotes Maharam of Tiktin who rules that if one rented a house but was unable to use it because a plague had forced the residents of the town to flee, the landlord remains entitled to the rent, as he may claim that the house remained standing and technically inhabitable throughout the term.  Maharam of Tiktin compares this to the case of the wine merchant who hired a non-specific boat to transport a specific set of wine barrels in which the merchant must still pay the boat owner since the owner is able to provide another boat and the wine merchant is the one preventing performance.¹¹

5.3 Shach’s Position

Shach (ibid.) questions Maharam of Tiktin but does not explicitly articulate his own position.  Rav Asher Weiss (Shu”t Minchas Asher 2:120) assumes that Shach views the case of a rental property as analogous to the case of the sharecropper whose field flooded, in which case  (according to the straightforward reading of the Gemara, albeit not that of Ra’avan) the landlord is not entitled to the rent.  This also appears to be the position of the Taz (334:1).

6. Prepayment and Assumption of Risk

When a tenant is unable to reside in the rental property due to a makas medinah, does it matter, for the purpose of allocating the loss, whether the rental fees were prepaid or not?  Regarding a rented house consumed by a city-ravaging fire, Rema holds that prepayment does not make a difference.  Since the landlord failed to provide a residence, the tenant may recover his prepaid rent.  This ruling stands in contrast to Rema’s ruling in the case of a tenant who dies in the middle of the rental term where he rules that prepaid fees need not be refunded.

However, Machaneh Efrayim (Sechirus 7) quotes a Yerushalmi (Gittin 6:6) regarding a person who rented a boat to ferry him across the river and prepaid the fee.  Before he was able to use the boat, the river dried up, rendering the boat service unnecessary.  Rav Nachman ruled that the renter was not entitled to a refund.  Machaneh Efrayim explains that here the boat remained intact and, in advancing the payment, which the renter was not required to do,¹² he implicitly accepted the risk of the proprietor retaining the funds.¹³

Machaneh Efrayim views the Yerushalmi’s conclusion as normative: even in a situation of makas medinah, if the rented property is still standing and technically inhabitable and the renter prepaid the landlord, the renter is not entitled to any refund.¹⁴ This is in contrast to a case where a fire burned down all the houses in a neighborhood, in which case the landlord must refund any payment as he is unable to provide a house to reside in.

In practice there does not appear to be a clear consensus as to how to assess the payment of a renter who is unable to benefit from a rental property due to a makas medinah, especially where money was prepaid.  In the volume Emek Hamishpat (R. Yaakov Cohen, Sechirus 50), the author ruled regarding summer rentals in the North of Israel during the Second Lebanon War that if the renter did not prepay he could not be obligated to pay, as he may rely on the opinions that even though the house was intact, the war situation created a makas medinah exemption. ¹⁵   If, however, the renter did pay upfront, the landlord cannot be forced to refund the money, as he has the right to claim (kim li) ¹⁶ that he holds like the Machaneh Efrayim. ¹⁷

Nevertheless, he concludes that it may be appropriate to reach some sort of compromise and refund a portion of the advanced funds, especially as one could argue that a house in a war zone that could be impacted by a rocket at any moment is like a house that burned down such that the landlord is not in a position to provide the house that he was contractually obligated to provide.¹⁸

While the aforementioned Rabbi Cohen and R. Ovadia Yosef Toledano (Shu”t Meishiv Mishpat 1:47) give significant weight to the Machaneh Efrayim’s position, Rav Asher Weiss believes that the halacha follows Shach and Taz, and therefore not only may we not compel the renter to pay for the rental period affected by a makas medinah, but even if a down payment was previously advanced, the landlord must refund it in totality.

7. Conclusion

In light of the range of opinions that we have explored, what should the bottom line be with some of the contemporary questions that we raised at the outset?  If someone rented a house in Florida for Pesach and was unable to use it because of fear of contagion, interstate travel restrictions, or a ban on short term rentals, the renter presumably could not be held liable for unpaid funds, as per the Shach and Taz.

If, in the more typical scenario, the renter advanced most or all of the funds before the onset of the pandemic, is he entitled to a full or partial refund?  Some would argue, as per R. Yaakov Cohen above, that the proprietor could claim kim li like the Machaneh Efrayim (or the Maharam of Tiktin) and keep all the money that he already received.  However, R. Moshe Williger, in an article in a recent volume of Kovetz Beis Aharon V’Yisroel, claims that all the rishonim who discuss a makas medinah that impacts on a rented property address a situation in which the makas medinah began after the tenant already moved into the property.  It is possible that even those authorities who pin the loss on the tenant would agree that if the makas medinah began before the tenant even stepped foot on the property, the tenant would be released from payment.  Furthermore, if there were state or local restrictions on short term rentals that prevented renting the property to anyone, then even Machaneh Efrayim may agree that the proprietor must refund payment that had been advanced.¹⁹ Even if one does not accept R. Williger’s observation and there were no legal restrictions to renting out the property but the risk of contagion impeded people’s mobility, a partial refund of money that had been advanced would be advisable – probably in the range of 50 to 75 percent –  and it requires further analysis to determine whether a future credit would be sufficient.²⁰

The obligation to pay for a wedding hall rented for a reception cancelled due to the coronavirus may be different from the case of a home rental in two ways.  On the one hand, once state and local governments banned gatherings of more than a few people, in many situations wedding halls were unable to provide the services that they were contracted for and no one else could have rented the facility instead.  That set of facts would make the case more analogous to the case of a burned down house such that even the Machaneh Efrayim and Maharam of Tiktin would presumably agree that the proprietor is not entitled to payment and must even refund any prepayment.   However, if the  wedding hall rental fee covered the salaries of multiple employees and service providers, that portion of the fee may be subject to the rules of makas medinah as they apply to employees. ²¹ The same should apply to a canceled Pesach hotel program.²² In all of these situations it may be proper to arrive at a reasonable compromise. ²³  May HKB”H speedily heal all of the sick amongst us, provide consolation to the bereaved r”l, and allow us to safely reopen our closed communal institutions.

1. The author wishes to thank Rabbi Yona Reiss and Rabbi Itamar Rosensweig for their review of and comments on this article.
2. See Terumas Hadeshen 329 and Shach 334:2.  According to Shach (based on his understanding of Terumas Hadeshen) the fact that the renter prepaid the year’s rent indicated that he was willing to assume the risk and was prepared to part with the money in the event of an ones. This rationale appears in Tosafos (Bava Metzia 79b s.v. ee atah).  According to Shach, the Rema’s distinction between whether the rent was prepaid is not predicated on a doubt as to whether to rule like Rashba or Maharam, as the simple reading of Rema would indicate.
3. Regarding whether other forms of ones would absolve a tenant from rent payments see Machaneh Efrayim Sechirus 5, Shu”t Avnei Nezer Choshen Mishpat 25, Pischei Choshen Sechirus 6:8, and Landlord-Tenant in Halacha Miluim 7.
4. For further analysis see Machaneh Efrayim Sechirus 5.
5. There is a dispute in the gemara (105b) as to the scope of damage necessary to qualify an ones as a makas medinah.  Shulchan Aruch (Choshen Mishpat 322:1) rules that for fields an ones is a makas medinah when it affects the majority of fields in the city.
6. Rema (321:1) writes that there is no claim of makas medinah if one could overcome the impediment posed through torach ve-tachbulos, effort and strategies.  In other words, one cannot hide behind a makas medinah exemption if an external factor makes it more difficult but not impossible to meet one’s contractual obligations.  The source of this qualification is Shu”t Maharam Paduah (39) regarding an individual who acquired the exclusive right to lend money with interest to the local non-Jewish population.  Subsequent to his entering into this contract, the local leader retracted the right of Jews to charge non-Jews interest on loans not involving collateral, significantly compromising the viability of this person’s contract. Over the course of nine months he made some attempts to have this decree overturned, and then petitioned  to back out of his initial contract based on a makas medinah exemption.  Maharam Paduah ruled that since the decree could have been overturned with more effort, the questioner remained obligated to abide by his contractual obligations.
7. Ra’avan refers to Jews being forced to flee a city but does not cite a reason for their flight.  Machaneh Efrayim, citing Ra’avan, presents the case as Jews fleeing because of an epidemic.
8. This ruling is not a function of makas medinah per se, but emerges from the cases of more generic ones discussed above. Teshuvos Maimoniyos compares it to the case of the wine merchant who rented a specific boat (sefinah zo) to transport unspecified wine (yayin stam) that sank mid-journey, where the gemara rules that the merchant need not pay as the boat owner is considered to be the party withholding performance. In this case as well, the tenant may claim that he is willing and able to reside in the rental property, but the landlord is unable to provide that residence since it burned down.  See Sema (312:34) and Nesivos Hamishpat (312:13).  It emerges from Nesivos’s analysis that according to Rema if a house burns down, even if it is not due to a makas medinah, the landlord bears the loss just as the Maharam ruled regarding the tenant who died in the middle of the term that the estate need not pay the balance of the rent. The only difference that makas medinah makes is that if the tenant prepaid the rental fees he is entitled to a full refund for the period in which he was unable to reside in the residence.  See below regarding prepayment of rental fees.
9. Sema (321:6 and 344:2) does accept a split of the loss in the context of employment contracts affected by a makas medinah.
10. The first and last sections of this teshuva without the lengthier middle appear almost verbatim in Shu”t Maharam MiRottenberg (Prague 388).  Read in a vacuum, Mahram writes that in principle the landlord bears the entire loss but in practice the loss should be split, since the landlord may claim that he could have found someone else to rent the property.  However, it seems difficult to present the Maharam as an alternate shittah to the Ra’avan, given that the language is almost exactly the same as Ra’avan, and is just missing the middle of the teshuva that sheds light on the conclusion.
11. Maharam of Tiktin was a student of the Rema who wrote glosses on the Mordechai.  This lengthy paragraph is printed on the last page of the classic printing of the Vilna Shas volume that includes Avodah Zarah, Horiyos, and Eduyos. In earlier printings, as referenced in the Shach, it was printed at the end of Seder Nashim or at the beginning of Seder Nezikin. 
12. In halacha we rule that אין שכירות משתלמת אלא לבסוף – rental fees need only be paid at the conclusion of the rental period (see Bava Metzia 56b).
13. See footnote 2 above.  Along these lines, Rav Zalman Nechemia Goldberg (Shaari Zedek Vol. 8 p. 123 et. seq.) suggests that there is a difference between the nature of a rental with a prepayment and a rental for which payment is offered at the conclusion of the rental period in explaining why prepayment even in the context of a makas medinah may not be refundable. It is questionable whether this analysis would be as relevant when prepayment is the industry standard or common, as is generally the case with property rentals. R. Meir Orlian (Business Halacha Weekly #580 Shavuos 5780) cites Maharach Ohr Zarua (66) as holding that when one demands prepayment, such prepayment does not indicate a willingness to forgo a refund in the event of an ones.  However, Maharach Ohr Zarua only appears to write this in the context of advanced wages and not rental payments.
14. Ketzos Hachoshen (322:1) appears to accept this approach in practice, albeit for a different reason, as does Nesivos Hamishpat (312:13). 
15. See Rav Ovadia Yosef Toledano, a grandson of Rav Ovadia Yosef and a member of Rav Asher Weiss’s beis din, in Shu”t Meisiv Mishpat (1:47) for an analysis of whether umdina, a presumption that no one would enter into a contract under such circumstances, plays a role in such determinations.
16. The principle of kim li allows an individual holding on to disputed money (muchzak) to retain that money when there is an unresolved dispute among earlier authorities as to who is entitled to the funds.  See Shu”t Chasam Sofer (Choshen Mishpat 95) who explains that kim li is predicated on the principle of ein holchin be-mammon achar harov – when it comes to monetary matters we do not necessarily follow the majority, and therefore one can claim to follow a minority opinion.
17. R. Toledano also concludes that the landlord may keep any advanced payments.  The context of his responsum is a wedding hall rental that was cancelled due to Operation Cast Lead (Dec. 2008 – Jan. 2009).  R. Cohen does raise the possibility that a short term rental is different from a long term rental, such that there is no argument that the landlord could have rented the property to someone else, as no one would enter into a short term rental in a war zone.  Regarding a long term rental the Maharam of Tiktin would hold that the renter would have to pay the entire rental fee.  One could, however, argue that if the rented house is inhabitable, even in a war zone there may be individuals in need of a place to stay who would rent such a house for lack of a better alternative and therefore the Maharam of Tiktin would obligate the renter in that case as well.
18. A recently published collection from the ledger of Rav Zvi Pesach Frank’s beis din (Pinkas Beis Hadin B’churvas Rebbe Yehuda HaChassid Vol. 2) contains a ruling (625) of the beis din regarding the claim of a landlord for full rent from a tenant forced to flee from an apartment in Hebron following the 1929 massacre.  The beis din awarded the landlord two-thirds of the money that he was owed for the period in which the tenant was unable to reside in the dwelling.  While the reasoning for the ruling is not stated, presumably it was based on some sort of pshara (compromise). 
19. What is the status of a post-dated check that is dated after the onset of a makas medinah?  Is that considered pre-payment  that the proprietor cannot be forced to relinquish?  May the renter cancel the check?  Rav Zvi Ben Yaakov, currently a senior dayan on the Tel Aviv beis din (Shu”t Mishpatecha L’Yaakov 1:11:13-15), in the context of day care teachers who were paid in advance and could not provide any service during the Gulf War, assumes that such checks are fully the possession of the recipient.  However, his analysis likely only applies in Israel, where one may not legally cancel such a check.  See R. Baruch Meir Levin in Landlord-Tenant in Halacha (2019), Miluim 7, who makes this point.  He cites a teshuva from the Debriciner who assumes that the possessor  of a post dated check is not considered muchzak.
20. Even if one were to accept the above argument that the Maharam of Tiktin’s position would not apply in the middle of a war zone, where no one would rent a property, it is possible that amidst a pandemic with travel restrictions there may still be local residents in need of a place to live who would rent a property, especially when no other location is necessarily any safer. See also R. Y. Blau, Pischei Choshen, Sechirus 6:10 and R. Ovadia Yosef Toledano, Mishpat HaSechirus 23:13
21. In a recently published monograph by a Rabbi Yaakov Risner, the author entertains such a distinction between types of rentals but concludes that since one could argue that everything is packaged together, if the wedding party had not paid in advance, it could not be compelled to pay anything.  Rav Hershel Schachter in a brief letter regarding Pesach programs does accept this distinction, subject to further qualification of what compensation employees may receive through unemployment or other government stimulus programs.  He notes as well that even if someone is not obligated to pay for certain services, if he has the means to afford it and the proprietor is in a compromised financial situation, it would be commendable to not demand the full refund that he may be entitled to, as a form of tzedakah.
22. Rav Yitzchak Zilberstein (Vavei HaAmudim Pesach 5780 pp. 57-58) rules that in the current situation the wedding hall is not entitled to any compensation.  
23. Many quote a comment of the Chasam Sofer (Sefer Zikaron Pressberg 1879 p. 37) who advocated a compromise in compensating employees who were unable to perform their duties due to war.  However, the same may not necessarily be true of property rentals, as the Chasam Sofer indicates that the impetus for compromise was his belief that in principle the loss in a makas medinah employment situation should be split between the parties, which is not the case in practice with a rental dispute.