Paper houses, Prepublication Specials, and Hilchos Ribbis
Common transactions that have Ribbis issues
By: Rabbi Ari Marburger
Reviewed by: Harav Dov Kahan, Av Bais Din Maysharim
Buying a house on paper
Developers often sell houses ‘on paper’, before they are actually built. The buyer signs a contract, gives a deposit, and then when the house is completed, closes on the house. Until the closing, the buyer does not actually take title to the land. The contract is merely a binding agreement to buy/sell the developed house in the future. Since there is no transfer of any goods at the time of the deposit, the monies advanced are viewed in Halacha as a loan until the closing takes place. In exchange for this loan, the seller agrees to freeze the price of the home. This type of agreement is called Poskin, and is Avak Ribbis. The seller is relinquishing his right to raise the price of the item, even though its market value may rise, in exchange for the buyer advancing the money. The actual difference between the market value and the lower sale price is considered Ribbis.
If two parties enter into a Poskin agreement, Halacha requires that the buyer pay the seller the actual market value of the item at the time of delivery. He may not buy the item for the lower agreed upon price since he is then ‘collecting’ the Ribbis.
Exceptions to Poskin
There is another important idea suggested by the Poskim that may justify the practice. The reason why Poskin is prohibited is because it is ‘Mechzi K’ribbis’, it looks like Ribbis. People may interpret the lower price as payment for advancing the funds. In a situation where the item being purchased will never have a clear market value, the discount will never be apparent. Houses often do not have a clear value. Therefore according to these Poskim, buying on paper would be allowed.
Sales requiring prepayment
There are a number of cases that have similar problems. When a merchant runs a sale on items that he does not have in stock and insists that customers pay the full purchase price up front in order to receive the sale price, it is Poskin. This scenario is especially problematic since there are two different prices, the sale price available to customers that prepay, and the higher regular price that other customers receive. This contrast highlights the benefit that the buyer receives for prepaying, and makes the Ribbis glaringly apparent.
Prepublication specials are even more problematic. Because the buyer pays for the item before it is even published, he receives a discounted price. The item is obviously not available elsewhere and will only become available for cash sales at a higher price.
A possible solution would be for the seller to allow customers to postdate their checks. Since the customer can obtain the item without prepaying, the locked in price is not considered payment for the loan.
The purpose of this article is to create an awareness of common Halachic issues. A Rav should be consulted for any practical application.
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