'' כל הנותן ברבית נכסיו מתמוטטים וכאלו כפר ביציאת מצרים ובאלוקי ישראך''

I would like to discuss a scenario, which is extremely common. I have personally given shiurim about this particular Sheila in many, many different places, and I have never finished the shiur without at least one person from the audience telling me they are currently in this situation; and often a number of people come forward. In fact, HaRav Chaim Wosner שליט''א once told me that he thinks this situation is the most common scenario in which שומרי תורה ומצוות in London are עובר an איסור דאורייתא.  Often people say “We had no idea, that this was a problem! Why don’t Rabbonim and Dayonim publicise it more?”    

I have therefore decided to write this article and rely onכלל ישראל  to pass it on to whomever they think it might be relevant to. I am sure that many people are aware of the sheilah, however, if one person is prevented from the Issur as a result of this article then it’s worthwhile.

There are situations when a young couple buy their first home, and for a number of different reasons buy it in their father’s or father in law’s name (or any other person’s name). Both from a Halachic and legal perspective, if the person who purchases the property in his name agrees that he purchased it for someone else, then it belongs to the person it was bought for. (This is especially true if the down-payment was the young couple’s or had been gifted to them). In such a situation, often the parent will take out a mortgage (in the parent’s name) in order to complete on the property, and the child will make the mortgage payments. This results in a very serious Ribbis concern.

The גמרא in בבא מציעא דף ע''א: explains that if a Yid borrows money from a non-Jew with interest, and then lends on that money to a second Yid; the second Yid cannot pay the first’s interest charge to the non-Jew. This is paskened להלכה in שו''ע יו''ד סימן קס''ח סאיף א'. A practical application of this Halocho would be, in a scenario in which Reuven needs funds, and his friend Shimon has an overdraft facility which would charge 2% interest. If Shimon borrows the money “for Reuven”, Reuven is not allowed to pay the 2% interest (either to Shimon or directly to the bank!), and Shimon will have to pay it at his own cost. The reason for this is because, Reuven is not allowed to pay back to Shimon, or to anyone else on Shimon’s behalf, any amount more than the original capital which was borrowed. Just like Reuven would not be able to pay Shimon’s gas bill direct, in addition to repaying the loan; so too he can’t pay his interest payments (even though Shimon only borrowed for Reuven’s benefit). The same would apply if Reuven bought something using Shimon’s credit card and there was an interest charge.

There are ways how one can structure this initially, which would result in there not being a רבית concern; however, if this wasn’t implemented at the outset, then it is more complicated to try and rectify it down the line.

If one analyses what is going on in our mortgage situation, it transpires there are two separate loans occurring simultaneously. The first is the mortgage funds which the bank/building society lends to the father. The bank are not lending to the child, and the child is not personally liable to them. The second loan is for the same funds, from father to his child to buy the property. These two loans take place simultaneously; however, they are two separate loans. The property now belongs 100% to the child/children, but if they were to sell it, the parent would  still expect the child/children to pay the capital amount owed to the bank for the loan!

If the father purchased the property in a stand-alone company which has no other assets, and the father did not accept personal liability, then there wouldn’t be a problem. This is because in such a scenario, the bank is only lending to the company, not the father; and since the company is reality owned by the son; it is viewed as a loan from the bank, direct to the son. However, in most cases the father will buy it in his own personal name and be personally liable for the loan; and in such a scenario the Poiskim pasken that the son is not allowed to make the monthly interest payments. ע' ברית יהודה, עיקרי דינים כ''א הערה י''ד, ושבט הלוי ח'ז' ס' ))

If someone finds themselves in such a position, there are ways to rectify the situation. However, one can’t just write a Heter Iska on an existing loan. A Rov familiar with these matters should be consulted. If a Sheila would have been asked initially, there would have been a number of options available, depending on various factors, but instead both parties have entered into an arrangement where according to most opinions, every month when the payment is made, both the father and son transgress numerous לאווין מן התורה