Q: I am renting a summer home for July and August at $2,500 a month. The landlord is willing to accept $4,500 if the entire sum is prepaid. Can I accept this offer?
A: The Mishna (B.M. 65a) teaches that although prepayment discounts for merchandise are considered ribbis, as discussed previously, it is permissible to provide a discount for rental prepayments.
One explanation of this distinction is that in prepayment for merchandise, there is no monetary obligation before consummation of the sale. Therefore, any advance payment is considered a loan to the seller, and hence potential ribbis. However, in prepayment of rental, there exists a monetary commitment from the beginning of the rental, even if the actual payment is due only month by month. Therefore, the prepayment is not viewed as a loan to the landlord, but as payment of an existing obligation, so that it is permissible to provide a discount for the months ahead. (Y.D. 176:6; Bris Yehuda 26:1 ftnt. 1)
According to many authorities, it is permissible to provide this discount even before the renter moves in. For example, the landlord may demand that payment be made by June 1, a month before the rental period. However, there must be a binding commitment to the rental, either through a signed lease or kinyan sudar. (Taz 176:7; The Laws of Ribbis 11:14-22)
Authored by Rabbi Meir Orlian
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