Buying from Debt Collection and Receivership - Rabbi Yisrael Meatuf shlita

00:02 Speaker 1 You’re listening to “Lema’an Yishme’u,” a podcast from Machon Halacha Chabad.

00:10 Speaker 2 Today we have a very interesting topic that builds on the previous classes: buying from the enforcement authority and from a court-appointed receiver. In the previous classes, we talked about buying stolen goods—when it’s permitted and when it’s forbidden. The question is, if someone finds a bargain through a receiver or the enforcement authority, is that considered buying stolen goods, or perhaps something even worse? Or, on the other hand, maybe it’s completely permitted. First, I want to begin by saying that today is the yahrtzeit of Rabbi Emil Aharon [?], my teacher and rabbi.

00:49 Speaker 3 My teacher and rabbi.

00:53 Speaker 2 And part of this class is based on what he wrote here in his book, “Shalat Na’ari Meir” [unclear], on the subject of dina d’malchusa dina. So we’ll go through the whole subject, both dina d’malchusa dina and all the other issues. We’ll start with how it works in practice and then move on to the halacha. How do enforcement proceedings and receivership work today? First, you have to establish that the person really owes money. How do you know he owes money? A court ruled that he does and issued a judgment, or there’s an arbitration ruling. What does that mean? Even private individuals who went to a dayan, a beis din, or any other person, right, and signed a document appointing him as an arbitrator—if they signed it and the entire procedure was conducted properly, then once that arbitrator issues a ruling, the court approves it and sends it to the enforcement authority. As far as they’re concerned, it’s like a court judgment. So, in short, either a court made the ruling, or there was an arbitration ruling, or it’s a bank that someone owes money to, and he already signed all the documents saying that if something happens, it will go to enforcement, and so on. Now, when it comes to an apartment, they appoint a lawyer as the receiver, and he handles the property. How does he sell it? He puts it up for tender and sets a date when people can come see the apartment. People come to see it and submit offers. But before he holds the tender, he brings in an appraiser to assess the apartment’s value. If the offers come in below the appraiser’s valuation, they put it up for tender again, because the offers were too low. The second time, though, they go with the highest offer, even if it’s below the valuation.

02:53 Speaker 3 The second time.

02:53 Speaker 2 The second time. Now, let’s see: there are essentially three parts to this process, and we need to examine whether each of the three is proper according to halacha. That will tell us whether we’re allowed to buy there. First is the initial stage. We said that to bring a case to the enforcement authority, you need a ruling. So first we have to see whether that ruling, that starting point, was proper. That’s the first part. For example, you know that a particular apartment is being sold because of a court judgment. Can a court judgment give me permission to buy that apartment? Is it valid according to Torah law? This is the part that relates to dina d’malchusa dina, which I said is discussed in Rabbi Aharon’s book. The second part is when they take his belongings from his home: are they taking them in the proper way? Everyone knows that with a loan, it says you may not enter someone’s home and take his furniture. But seemingly, that detail isn’t so relevant after the fact, once they’ve taken it. The question is what they leave him. There’s a principle in halacha called mesadrin l’baal chov: a debtor, someone who owes money, is left the minimum he needs. The question is what halacha requires and what the law says. We’ll look at that shortly. Do they leave him—

04:17 Speaker 3 What do they leave him? Enough to live on?

04:19 Speaker 2 Enough to live on. You can’t leave him without food, without anything. And the third part is how they sell his property. Do they sell it in a way that the Torah permits? So we’ll go through these one by one. Let’s start with the first part. A person comes... Now, let’s put it this way: someone who wants to buy from a receiver generally doesn’t know the background. All he knows is that a receiver has been appointed over the property. That’s essentially a situation of doubt; you don’t know what led to it. At the end, we’ll see whether you can rely on it or not. Seemingly, you can’t just come and buy without knowing what happened behind the scenes. But if you do know what happened—for example, when a property is put up for sale, its address is given. It has an address; you can go and speak to the owner and ask him. So if you know the story, and it really began with an arbitration ruling by a beis din, for example, then the first part is fine. But what happens if it began with a court judgment?

05:32 Speaker 3 Meaning, it didn’t just begin there—it began earlier. The owner has already been taken out of the picture.

05:37 Speaker 2 But he was taken out—why? How did it start? Someone sued him in court, and the court ruled that he owed money. So this relates to dina d’malchusa dina, which is a very broad subject. A great deal of ink has been spilled on it. But let’s take the point relevant to what we’re discussing now and read what the Rashba says about it. He writes in one of his works: “As for dina d’malchusa dina, which you mentioned, it was certainly said only of what is established by royal authority and of matters that belong to the laws of the kingdom.” He says that dina d’malchusa dina means the laws of the kingdom. Now, we’re talking about countries outside Eretz Yisroel in their time, okay? Monarchies of the past. Later we’ll see what applies today. The Rashba is talking about monarchies of the past. So he says that if it’s a law of the kingdom, fine—that is the law of the kingdom. Then he says: “They said dina d’malchusa, the law of the kingdom; they did not say dina d’malka, the law of the king.” They said dina d’malchusa, not dina d’malka. It’s not a matter of one person doing whatever he wants. There’s a kingdom, with established laws. Then he says: “Rather, just as we have laws of kingship, as Shmuel said concerning them, so too among the other nations, kings have known laws, and of those laws they said that their law is law. But rulings issued by the courts are not laws of kingship. Rather, the courts rule on their own, according to what they find in the judges’ books. For if you say otherwise, you have, G-d forbid, nullified the laws of Israel. This has already come before me, and I ruled accordingly.” The Rashba says we can’t apply dina d’malchusa dina to every court ruling. If you do, the court has its own body of law, its own sort of Torah that it follows, and you’ve nullified

07:31 Speaker 2 the laws of Israel. You wouldn’t need all of Choshen Mishpat; you could put it aside, because there’s a court making the decisions. Even if you say dina d’malchusa dina applies in a particular kingdom, it applies to the kingdom and its laws, not to court rulings. Because—

07:48 Speaker 3 Of a non-Jew. It doesn’t, doesn’t—

07:50 Speaker 2 Right. Correct, the laws of a non-Jewish kingdom. Nevertheless, the Torah says—and there are three reasons for this. Rabbi Aharon lays out the three reasons why we really must obey the king very nicely here. First, the people accepted it: the country accepted the laws of that kingdom. That’s relevant today as well. Does it apply in Israel or not? We’ll say a word about that shortly, but let’s say that outside Israel, it applies today. There’s an organized state; the people who live there accept the laws of the country, vote at the ballot box, and accept its laws. But two other reasons are given. It’s very interesting, in the Alter Rebbe’s wording—very nicely put. First, the land belongs to the king. Why? Because he conquered it. And on this point, anyone who wants to look in the laws of ownerless property and encroachment will see that the Alter Rebbe discusses it at length. He explains how ownership works: in our world there are deserts, seas, and rivers. Who do they belong to? What is considered ownerless, and what belongs to someone? He sets it out very clearly. So he says the land belongs to the king. He can say, “Anyone who wants to live here is welcome, but there are conditions, there are certain laws. You can live here on those terms.” That’s the second reason. The third reason is also very interesting. The very fact that you use someone’s money—his currency. The coins bore the king’s stamp, and so on. Whoever chooses to use... By the way, as an aside, in Gaza they use our currency, shekels. In effect, they’ve accepted our sovereignty. Whoever chooses to use the king’s currency, the Alter Rebbe says—citing the Rambam—accepts him as his master. He is then considered a servant, and everything he owns belongs to the king.

09:35 Speaker 4 But today there are no kings.

09:37 Speaker 2 Right. And that is also what Rabbi Aharon Posner said in his conclusion. He says the last two reasons do not apply today: neither ownership of the land nor a king’s power over a subject like a master over a servant, and so on. He says that today, even the king himself is, so to speak, ultimately subject to the courts or the legislature and so on. He doesn’t really have the power...

10:00 Speaker 4 A dictator.

10:00 Speaker 2 Yes, right, there are places with dictatorships.

10:02 Speaker 4 Even today, they can seize your house.

10:05 Speaker 2 How?

10:06 Speaker 4 If a person doesn’t pay taxes, his house can be seized. It isn’t one hundred percent his even today.

10:12 Speaker 2 Okay. Today there is also, in our country, this idea that you lease for forty-nine years, but still, that isn’t really a private person’s ownership. So let’s say, as to the first part—you asked how the whole thing got started—is there a problem here? There is a problem if it started with a court ruling. And it isn’t only that it’s a court: the things they require people to pay sometimes include interest, compensation for distress, and all sorts of things that don’t exist in halachah. Not only do they not exist; sometimes it’s forbidden to collect them, and the courts require payment. They add interest and indexation to a debt and require payment, whereas under halachah it’s forbidden to collect that unless there was a heter iska, and so on. But if it began with an arbitration ruling by a beis din, or it began with a bank—when a person takes out a mortgage from a bank, he comes in and signs, essentially agreeing to all the bank’s terms—then that first part is fine. Now let’s move to the second part. What do they take from a person, and what do they leave him? So let’s see what the law says, and then what halachah says.

11:23 Speaker 4 What do they take?

11:24 Speaker 2 What? When you come to take a person’s belongings, you have to leave him a minimum. What is the minimum you leave him? So the law says... What?

11:33 Speaker 4 His pets.

11:34 Speaker 2 Yes. Maybe we’ll start at the end. The law says you have to leave him his pets. It’s funny.

11:43 Speaker 4 What?

11:43 Speaker 2 There’s a list of things here. Food sufficient for thirty days, for example. That’s what the law says. Sets of clothing, beds, bedding, medical equipment, medicines, eating utensils, kitchen utensils, other household items, articles used for mitzvos. I’m reading it here from the Enforcement and Collection Law, 5727; that’s the source. Articles used for mitzvos, including movable items in a place of prayer that make it possible to conduct prayers reasonably. There are all sorts of definitions here: tools, devices, machinery, a vehicle, animals without which he cannot earn his living; and for a person with a disability, various things he needs for his use; and pets—that’s the last item. I don’t know why that became such a point of interest. Now let’s see what halachah says about what a person keeps when they come to collect from him, and see whether the law meets the test of halachah. So we have source number two here. The Alter Rebbe writes here—and as we’ve often said, in his Choshen Mishpat, which is a very slim book, so to speak, the Alter Rebbe drew out of all of Choshen Mishpat what applies to the individual, not what applies to a beis din. So here, too, when he discusses a debtor, he doesn’t say what a beis din does with a debtor. He says how the debtor himself must act as someone obligated to pay: what he may keep for himself, so to speak, and what he must pay when he owes someone money. So let’s see. The Alter Rebbe says in number two: “Nevertheless”—this continues from what was written before, that a person must give everything he has—he says, “All money that comes into his hands, and all movable property beyond what is provided for a debtor”—and we’ll see what that means in a moment. The Alter Rebbe doesn’t spell it out fully here—“he is obligated to give it all

13:35 Speaker 2 to the lender and keep for himself only enough food for thirty days.” So notice already, this is—

13:43 Speaker 5 He’ll do it before him—

13:44 Speaker 2 That’s exactly—

13:45 Speaker 5 Do they have to do it for him, or does he do it himself?

13:47 Speaker 2 Yes, exactly. Now, food for thirty days is just like—no, it isn’t that halachah is just like the law. The law is just like halachah, and it’s quite possible they took it from halachah. Someone who reads the law on lost property, for example, feels as though he’s reading Eilu Metzios. The rules there, the identifying signs, the details—almost everything is taken straight from Eilu Metzios. What? Yes. “And clothing for twelve months for himself alone, not for his children and wife.” Notice that.

14:18 Speaker 5 That isn’t in the law.

14:18 Speaker 2 Yes, the law doesn’t really discuss the—perhaps you could infer something there about members of the household; I didn’t notice. Perhaps you could infer it. Ah, clothing for twelve months, right. It does say clothing, but it doesn’t say for how long. It says food, clothing, beds, and so on. “And so always: whenever any money or movable property comes into his hands, he must give it to the lender and keep for himself only enough food for thirty days and clothing for twelve months from the day the money came into his hands.” In other words, every time he receives more money, at that moment he looks thirty days ahead for food, and a year ahead for clothing. Everything else he has to give the lender. “And even if he is a Torah scholar whose Torah study is his occupation, he is obligated to sell his books, even a Sefer Torah.”

15:06 Speaker 5 The law says you can’t take that from him.

15:08 Speaker 2 Right. No, but tefillin—we’ll see that shortly in the Shulchan Aruch. The Alter Rebbe doesn’t detail everything here. The Shulchan Aruch gives a little more detail. A person does keep his tefillin, but not his books. Yes, under the law it sounds as though he keeps his books. Even a Sefer Torah must be sold. Yes, even though there’s a mitzvah for us to have a Sefer Torah, nevertheless.

15:27 Speaker 5 But not a kosher one. They don’t leave that. That’s how people used to study.

15:33 Speaker 2 Yes.

15:33 Speaker 5 A Sefer Torah.

15:36 Speaker 2 And to repay the—now notice this—

15:38 Speaker 5 Rosh Hashanah and terumah.

15:39 Speaker 2 The most severe point here: “And it goes without saying, a dwelling.” In other words, of course his home is sold. That’s the big difference between halachah and the law. What?

15:53 Speaker 5 If it’s there in the law, then it’s as though they protect it.

15:55 Speaker 2 That’s certainly—I don’t know, maybe—

15:59 Speaker 5 Even today.

15:59 Speaker 2 Right, even today they’ll give him that, but in this law there is, in principle, tenant protection. There is tenant protection. If he signed a waiver, then it’s more... Under halachah there is no tenant protection. He has to sell the house and go out and find somewhere to live. That’s how it comes out. It’s a dispute among the later authorities, by the way. What? Actually, the beginning of the section is perhaps important for what he’s saying: don’t take out loans. The section begins... How, how? The Alter Rebbe begins like this: “A borrower is forbidden to take out a loan or spend it on anything other than what he needs for his livelihood in a way that causes the lender to lose it, leaving him with nothing from which to collect his debt. If he does so, he is called wicked. Even if the lender is very wealthy and he is poor, as it says, ‘The wicked borrows and does not repay.’” He then says that the lender, too, should not lend to him if he knows him to be that sort of person. But if he spent it on his livelihood and afterward his means failed and he has nothing with which to repay, it is beyond his control. And that is the case he is discussing throughout this question of what he keeps and what he gives.

17:11 Speaker 6 Within that same transaction.

17:14 Speaker 2 That same transaction.

17:15 Speaker 6 Because then he is [unclear] from the transaction.

17:18 Speaker 2 Yes, that’s about interest, to exempt him from the interest. That’s the purpose.

17:28 Speaker 6 That doesn’t resolve the... It doesn’t address that. Yes, fine. It doesn’t consolidate the debt; it...

17:35 Speaker 2 Right, now let’s see. The Alter Rebbe wrote very briefly: food for thirty days, clothing for twelve months. But at the beginning he did mention “all movable property beyond what is provided for a debtor,” without spelling it out. In the Shulchan Aruch—the Shulchan Aruch of the Beis Yosef—it’s explained in more detail. I won’t go on at length, just briefly. He mentions a bed to sit on, which is essentially one armchair in the home; a bed, a mattress, and the other bedding needed for sleeping. Then he says that if the debtor is a craftsman, he is given two tools of each kind for his trade. Two hammers, two... two of each thing. But he says that a donkey or a boat, even if that’s what he uses for work, is not left to him, because those aren’t tools; they’re assets. That’s already too much. Then he discusses books, a Sefer Torah, and so on. And then the Shach comes along and says that he must give up his home as well.

18:40 Speaker 6 The Shach.

18:40 Speaker 2 The Shach, yes, the Sifsei Kohen. Someone disagrees with him—the Maharik disagrees with him. The Alter Rebbe ruled like the Shach, that he must be left a place to live. So if you look at the law and at halachah, the law is much more lenient here and leaves him with more than halachah requires. So this part, the second part, is in order. It turns out that the enforcement office is acting properly. That’s the second part. Now the third part: how the sale is carried out. How are you supposed to sell a property, or collateral, or anything like that, and give the money to the lender? That’s number three. The Alter Rebbe says: “And how do the assessors value the collateral, or other movable property, or land belonging to the borrower, with which the lender is to be paid?” There’s something that has to be used to pay the debt—how do you value it? He says: “They value it at the price for which the lender could sell it immediately, even while sitting in his home, according to the circumstances at that time.” In other words, the price we set can’t be one that would require him to go crazy trying to sell it. It has to be an attractive price: he can sit at home, advertise the sale, and people will come to buy it. That’s it. He shouldn’t have to go around to towns and markets to sell it, or even wait for market day in that town, when there would be many buyers bidding against one another. Market day is another month away—should he wait another month? No. He needs to be paid now. He has to—he can sell at today’s price. The assessors. The assessors, yes. What would someone who needs this item and wants to buy it pay right now? The lender receives it at that amount, because that is its value now. Now, on the face of it, what the enforcement office does seems better. They hold a tender and wait; people submit bids, and they arrive at the best offer. And if

20:39 Speaker 2 it’s below the assessed value, they hold another round. On the face of it, that seems better. But let’s look at the Alter Rebbe’s next passage. He says: “And even if there is no one before us now who wants to buy it for that amount.” You advertise it, and you see that people aren’t coming. But the assessors came and valued it. They said that someone who needs a book like this would pay forty shekels for it. That’s what the assessor said. You advertised it, and nobody comes. What do you do? The Alter Rebbe says: Why aren’t they coming? “Because they see the borrower’s distress, that he is compelled to sell it, and they think they can press him further so that he will sell it cheaply.” They aren’t coming because they know someone owes money, and that’s why the item is being advertised. In our terms, it’s an enforcement-office sale. Why do people come to buy from the enforcement office? They come to get a bargain. They’re looking for a bargain. They won’t come and pay the regular price they would pay in a store. That’s really what this passage is saying. They’re looking for someone who won’t manage to sell, so that, because of his distress, they can buy cheaply. But the Alter Rebbe says: What is its value, its real value? What someone who needs the item and wants to buy it now would pay—that is its real value. So what do they actually do? In principle, the lender has collateral, but he isn’t supposed to take it for himself; he’s supposed to sell it to others. But if it reaches a point where nobody wants to buy it, the beis din gives it to the lender himself. At what price, though? At the price the assessors said was its real value. So what does that mean? The two passages contradict each other. That’s it. What he’s saying here is, theoretically, if I had a store right now, and this wasn’t someone who owed money but a store, and he set that price and advertised it, someone who needed the item would come and buy it. In this particular case, people don’t come to his home because he isn’t advertising it as a store. He’s advertising it as someone who owes money, and when someone owes money, people will always wait rather than come; they’ll wait for the price to drop.

22:29 Speaker 2 So that’s similar, I’m saying, to what happens today. People come to enforcement-office sales and always submit lower bids. They won’t make a high offer, because they say, “At that price, I can just buy a regular secondhand apartment. I don’t need to get into something like this.” So it would seem that this third part is a problem in the very case we’re asking about now: whether it’s permissible to buy through the enforcement office and a court-appointed receiver. Usually, the person asking that question is asking because he’s found a bargain. He’s found something being sold cheaply. So on the face of it, according to this rule, he would not be allowed to buy it, because it isn’t really being sold according to halachah, according to Torah law. What emerges is that the first part is often problematic, if it didn’t begin with a ruling by a beis din or with a bank. The third part is also often problematic if the property is sold cheaply. The middle part—what they take and what they leave him—we said is fine; it accords with halachah. What about making a deal with the property owner? You mean that now you would [unclear]? Good, good, good. That’s exactly it. That is certainly the best option. If you contact him and say, “I’m making this offer,” he’ll probably—perhaps you could even give him a little more money, another twenty thousand on the side. He’ll feel all right about it too, because in any case he can’t get that money out of the state. And you’re also in the clear, because you’ve made it up to him. That’s a suggestion the poskim give.

24:06 Speaker 2 In principle, you have no contact with him, but once you have an address—when an apartment is advertised, there’s an address. There’s an address, so you can, if you want to. If you don’t want to... If there’s an address, then it goes through the enforcement office again. There’s no connection between the enforcement office and the... No, it depends on what it is. With an apartment there’s an address, because you need to come and see it. If they advertise a date, you can come and see it. With movable property, though, there really won’t be an address. In one respect, movable property is easier than an apartment. We’ll soon see in what way it’s easier. Now, this solution of making it up to him is a solution the poskim mention. Go and make it up to him with money, and that settles the matter. Now, there’s another solution that some of the poskim have suggested. They said the following, and it relates to what we discussed in earlier classes. There’s a concept called yei’ush—giving up hope of recovering something. A person gives up hope of recovering something. Seemingly, a person whose property was taken by someone else has given up hope of getting it back. Now, there’s an entire section in Shulchan Aruch, section 236, with various cases where someone’s property was taken: a non-Jew took it by force or not by force; the owner owed him money or didn’t owe him money. There are many, many details there. So that’s what I meant when I said movable property is a bit easier, because yei’ush applies to movable property. If someone’s item was taken and he gave up hope of recovering it, yei’ush applies. What about land? Does yei’ush apply to land? Let’s see what the Alter Rebbe says. Number four: We learned in the classes

25:52 Speaker 2 Earlier, we said that it is forbidden to benefit from something stolen. The Alter Rebbe says: “Likewise, one may certainly not enter a stolen house to shelter from the sun or from the rain.” You know a house is stolen. May you go in because of the sun or the rain? No. Or cross a field that you know for certain is stolen. Why would you cross it? You know the field is stolen; you may not cross it. And even if the landowners have given up hope of recovering it, and even if it has been sold to a second, third, and fourth person—there has been yei’ush, giving up hope, and a change of ownership twice—may you benefit from it or not? The Alter Rebbe says that land cannot be stolen in the legal sense and never leaves its owner’s possession to become the property of the person holding it, because land always remains in the possession of its true owner. The Alter Rebbe is saying that land is not an object. An object passes from hand to hand; if there has been yei’ush and a change of ownership, fine. So if the enforcement authorities took someone’s belongings from his home and he has already given up hope of recovering them, the question is whether you can buy them in the first place or only after the fact, since there was something like yei’ush and a change of ownership, making the yei’ush stronger. In any event, there is room to permit that. But yei’ush does not apply to this apartment, because it is land. Okay? Land. What do the halachic authorities say about this? They say no, there is a solution. There is a passage in the Yerushalmi; we’ll read it now. We won’t go too deeply into it, just one line. The Yerushalmi here is in tractate Kilayim. What does this have to do with kilayim? When someone plants wheat beside grapevines and so on, the two become forbidden, but a person cannot render something that is not his forbidden. So the question is: if someone comes along, a usurper who seized land, and plants wheat there, does he create the prohibition of kilayim? The Yerushalmi says—Rabbi Acha said: “If the owners’ connection to the land has faded from memory but they have not given up hope, its prohibition is from the Torah.” If

27:58 Speaker 2 this land has reached a point where a usurper took it and has been there for years, so much so that the owners’ connection to it has faded from memory—that is, nobody remembers anymore. They don’t call it so-and-so’s land; they call it the thief’s land. That is what “the owners have faded from memory” means. His name is no longer associated with the land, but he still has not given up hope. In that situation, the Yerushalmi says the prohibition is from the Torah. In other words, the kilayim are forbidden by Torah law. “If the owners have given up hope but their connection to the land has not faded from memory, their prohibition is rabbinic.” He says it is rabbinic; never mind, those are the laws of kilayim. Then the Yerushalmi asks: “Can land be stolen?” What does that mean? What is all this about yei’ush and...? Can land be stolen? Rabbi La said—yes, those familiar with the Yerushalmi know that the initial alef often drops out. This is Rabbi Ila, whom it calls Rabbi La. It also calls Rabbi Abba “Rabbi Ba” and Rabbi Ami “Rabbi Mi.” Yes, that’s how it goes in the Yerushalmi. Rabbi La said: “Although land cannot be stolen, yei’ush does apply to land.” The Yerushalmi holds that yei’ush applies to land, at least in a situation like this, where the owners’ connection to it has already faded from memory. Their name is no longer associated with the land. On that basis, some halachic authorities do indeed want to permit buying from a receiver today: once a receiver has taken it from a person, that is a kind of fading from memory of the original owner. It is no longer in his name; it now belongs, as it were, to the state, and he has completely given up hope. He knows there is no way to get it back. But apparently the Tzemach Tzedek does not agree with this permission. Let’s read it in item six, just one point. The Tzemach Tzedek writes: “The Rambam ruled that land cannot be stolen at all, and the Hagahos Maimoniyos wrote that this is contrary to the Yerushalmi, because our Talmud is authoritative,” and so on. Anyone who reads the

29:47 Speaker 2 Tzemach Tzedek sees that he does not accept the idea that yei’ush applies to land. It does not apply. Even if the owner’s name has faded from memory, it does not apply to monetary ownership. It may apply to questions of prohibition, but not to monetary ownership. That is what the Tzemach Tzedek says. So that basis for permitting it has fallen away. When, then, can you buy? According to this, it would seem that whenever you find a bargain, you cannot buy it, because the sale is always improper. This brings us to an apartment sold because of a mortgage. When a person signs a mortgage, he agrees not only to put up his apartment as security; he also agrees to the whole procedure. In effect, he agrees in advance that if he does not pay, it will be sold through the receiver’s process. So he has agreed from the outset that it may be sold cheaply.

30:30 Speaker 7 What did I say? It’s not...

30:32 Speaker 2 Good, good, very good. And this is where... Almost every book you open on the subject of enforcement proceedings and receivers makes this distinction. An apartment sold under a mortgage is permitted. If you know its background, you look into what happened and know it came from a mortgage, you may buy it because the owner signed.

30:53 Speaker 7 If the value isn’t [unclear].

30:55 Speaker 2 What?

30:56 Speaker 7 It says here, too, that it is mortgaged to the bank.

30:58 Speaker 2 Mortgaged to the bank.

30:59 Speaker 7 You’re lending me—not a million shekels, just fifty or a hundred thousand shekels.

31:03 Speaker 2 Yes, it’s registered in your name in the land registry, but it’s mortgaged—

31:06 Speaker 7 The owner.

31:08 Speaker 2 Yes, but let’s say that under halachah, and under civil law too, you are the owner, but the property is mortgaged to the bank. The question is whether the bank can do whatever it wants and sell it cheaply. Anyone who has seen the appraisal an appraiser writes when a mortgage application is submitted knows that the appraiser gives you a normal price and a forced-sale price. He tells the bank in advance what the apartment would sell for under pressure. The bank does not have the ability to wait through the whole... It wants to sell quickly. The question is whether it is allowed to. So, quite simply, all the later halachic authorities write: if it is a mortgage, it is permitted; in other cases, there is a problem. Then some of the authorities raise the point he asked about. Seemingly, this is an asmachta. What is an asmachta? We won’t spend long on it, but there are all sorts of conditions a person agrees to because he is sure they will never come into play. He says to you, “Look, I want to work for you,” and you say, “Wait, what if you don’t show up for work tomorrow, or whatever?” He says, “Don’t worry. If I don’t show up for work, I’ll pay you a thousand shekels for each day I miss,” so that you’ll rely on him and give him the job. In practice, one day he cannot come in. Does he have to pay that thousand shekels or not? Under halachah, he does not, because he did not really intend to pay it. He was sure it would not—that the situation would never arise. That is called an asmachta in halachah. How do you make the commitment binding, so that it is not an asmachta? You need to make a kinyan before an esteemed beis din. Never mind the precise definitions of that, but

32:40 Speaker 2 it is simpler than it sounds. In the document where you undertake an obligation to someone, you simply write that it was done before an esteemed beis din. Even if it was not actually done, you can acknowledge that it was. Yes, “A litigant’s admission is equivalent to the testimony of a hundred witnesses.” You acknowledge that it was done, as it were. You obligate yourself as though it had been done before an esteemed beis din. So that, by the way, is a line that anyone drafting a contract who wants it to be halachically valid needs to add: that a kinyan was made before an esteemed beis din. And the Alter Rebbe introduces an innovation that is not written by any halachic authority—

33:07 Speaker 8 Regarding that apartment, he needs to give them that declaration, that he’ll write it before a court. Yes. There’s also the whole...

33:15 Speaker 2 No, that’s just it. We don’t do that at the bank. At the bank, nobody writes that he...

33:18 Speaker 8 He needs to do it.

33:19 Speaker 2 Huh? No, I’m saying—

33:21 Speaker 8 You did that.

33:21 Speaker 2 No, I mean if you make a contract with someone about, I don’t know, an employment contract, a contract... For example, an ordinary sale contract has a penalty clause: a penalty if someone cancels, ten percent, fifteen percent. Both parties want that penalty to be paid if the contract is canceled. If both are Torah-observant and, when something happens, they go to a beis din rather than a civil court, the beis din will not require payment of the penalty because it is an asmachta. If both parties want it to be binding, they need to write that clause, and then it will bind them.

33:50 Speaker 8 That, too, presumably doesn’t work.

33:52 Speaker 2 It isn’t written in the bank’s documents, but perhaps that is a problem if the bank’s documents don’t say it.

33:59 Speaker 8 How can that be, even though we didn’t [unclear] here?

34:03 Speaker 2 They asked about this in one of the classes here. It certainly takes effect. Okay? It takes effect. Whether, halachically, that makes it—

34:10 Speaker 8 It’s an admission.

34:11 Speaker 2 No, that’s an admission. A person can obligate himself. For example, he can tell a lender—say he draws up a loan document and writes in it that this lender is more credible than two witnesses, and then signs it. Now two witnesses come and say he paid, while the lender says he didn’t. Whom do we believe? The lender. How can that be? The Torah says, “A matter shall be established by the testimony of two witnesses.” But he accepted this upon himself. So here, too, he accepted it upon himself; he effectively admits that it was done before an important beis din. By the way, one of the methods of acquisition used in selling chametz is—well, I don’t know whether it’s in our document; I don’t know if it appears there—but the Ketzos says to use this concept of odisa, an admission. You admit that the chametz belongs to the non-Jew, even if you haven’t performed any other act of acquisition. The very fact that you admit it belongs to him makes it his. So it turns out that this is an acquisition effected through speech. Now, regarding what he asked: in practice, the bank doesn’t write anything like that. It doesn’t write “an important beis din.” So how does it take effect? Here’s the interesting part. Let’s read the wording, and with that we’ll finish. We have the Divrei Chaim here. He was discussing a case in which someone, uh, guaranteed a payment to the state—state taxes, something like that. He undertook a guarantee, and in practice they came and held him liable and sold one of his properties cheaply at auction, exactly as we’re learning now.

35:31 Speaker 8 From the guarantor.

35:31 Speaker 2 From the guarantor. They took the guarantor’s property, exactly. Now look at what he writes. He writes: “Now, anyone with even a little familiarity with the regulations of this country knows that everything has laws called ‘paragraphs.’” If anyone knows that word, translate it for me. I looked a bit and didn’t find a translation, but it means the laws. “And if someone accepts an obligation under a paragraph, he is bound to fulfill it by virtue of a condition, not at all by virtue of dina d’malchusa, since he explicitly accepted this obligation upon himself.” A person comes and accepts the laws. He undertook some sort of state guarantee or entered into some arrangement; he accepted the laws of the state, including the risks spelled out there.

36:13 Speaker 8 There’s a difference between someone who comes into a country from outside and someone born in the country. Someone who comes to the country—

36:19 Speaker 2 Yes.

36:20 Speaker 8 He accepts them upon himself. Someone—

36:21 Speaker 2 Oh, someone who was born there.

36:22 Speaker 8 Someone who comes there... A person born there was born into it through no choice of his own.

36:26 Speaker 2 By the way, once he’s born there, he can leave and live somewhere else. The fact that he stays here means he also accepts it upon himself, even if he was born into it. Okay, then he says: “It is also known that in matters of kupatzia”—kupatzia means a guarantee. Did I look that up and find a translation? Huh? I don’t know. “There are various laws, and one of them is that if the lessee does not pay as obligated, all the guarantor’s assets will be sold. They will first be appraised, and if there is a licitation”—that means an auction—“if there is an auction and the bids do not reach the appraised value, the assets will be sold for whatever they can fetch in order to collect the debt.” In other words, everyone here accepted the laws of the state upon themselves. Not, as he says, because of dina d’malchusa, but because he accepted them upon himself by entering into that arrangement. And what do the rules say about the guarantee? They explicitly say that the property is sold, and that if it’s sold this way at auction, they take the highest bid, even if it’s below the appraised value. And the guarantor who signed for this kupatzia certainly wrote that he was obligated as described above. If so, he obligated himself to fulfill it by virtue of a condition. Especially since everyone knows this legal provision—that property is sold at licitation, meaning auction, even for far less than its value. Everyone knows that, so the guarantor accepted it and is obligated by virtue of a condition. And here, further on, your question appears. He says: “Nor can one argue that this is an asmachta.” Why? Because, as is known, asmachta does not apply here. That’s what he writes; he doesn’t elaborate. He treats it as straightforward. I think the answer is very simple. Any mortgage—and a mortgage is nothing new; it already appears in the Gemara, mortgages with deductions and without deductions—any lien or mortgage on a property would seemingly be an asmachta. I thought I would repay the loan and you wouldn’t take my house. In the end I didn’t pay, and you take my

38:20 Speaker 2 house. Why are you taking my house? That’s an asmachta. What’s the answer? You are placing a lien on the property. It’s a kind of transfer, somewhat like selling something to someone. Generally, as you said, when you sell something to someone, it becomes his. When you transferred the property to him, it became his to the extent that he can collect from it. So when you transferred it to the bank, you gave it ownership rights, with all the accompanying conditions. Seemingly, that’s what he means. You gave it the power to collect even if the property sells cheaply, below its appraised value. According to this, the conclusion is that if we’re talking about an apartment purchased with a mortgage, and someone failed to pay the mortgage, it would seemingly be permissible to buy it, because the debtor accepted all the applicable rules, including this one. So it would seemingly be permitted.

39:11 Speaker 8 What if he took out the mortgage when the house was worth one million, and today it’s worth four million? Where’s the proportion?

39:19 Speaker 2 No, of course they give him the difference.

39:20 Speaker 8 No, that’s what interests me.

39:21 Speaker 2 They give him the difference. But he hadn’t taken that into account. As for the other cases, though, according to the Alter Rebbe and the Tzemach Tzedek, since there is no yei’ush—abandoning hope of recovery—with land, and land cannot be stolen in the halachic sense, it would seemingly be a problem. With movable property it would be a bit easier because of yei’ush.