Photo Credit: Jewish Press

Yeshivah Harchev Picha had grown in recent years and was tight on classrooms. Adjacent to the yeshiva was very simple, empty office space. The yeshiva arranged to rent some of the space at a minimal cost to use as classrooms.

The office space was poorly insulated, though, and did not have proper heating. The yeshiva’s administrator, Rabbi Gross, turned to the landlord to make the premises more accommodating for their needs.

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“I rented the property as is,” replied the landlord. “I’m not interested in investing to upgrade it. You can do what you want.”

The yeshiva hired someone to winterize the rooms and install doors and wall heaters. It cost a fair amount, but the yeshiva was pressed for space.

Two years later, the yeshiva found more suitable premises and was preparing to move out.

Rabbi Gross turned to the landlord and asked for reimbursement for the improvements they’d made to the property.

“I didn’t ask you to invest in those repairs,” replied the landlord. “You did them for your own benefit!”

“But we enhanced your property,” countered Rabbi Gross. “If you’re not going to pay, then we will remove everything we can, including the doors and wall heaters.”

“If you’re going that route, I’m willing to pay half their base cost,” replied the landlord. “The labor you paid for anyway for your own use; I shouldn’t have to pay now.”

“But you would have to pay for labor if you want intact doors and heating,” argued Rabbi Gross.

Despite efforts to reach an agreement, Rabbi Gross and the landlord remained at odds. They came before Rabbi Dayan and asked:

“Does the landlord have to pay? Alternatively, can the yeshiva remove what it installed?”

“The Gemara (B.M. 101a) teaches that a person who improves another person’s property is entitled to reimbursement,” replied Rabbi Dayan. “The degree of reimbursement depends on the suitability of the improvements.

“If the improvements are warranted, the person is entitled to the going rate for such improvements. If they are not warranted, he is entitled to the lower of either his expenditures (plus minimal payment for his time) or the value of the improvement” (C.M. 375:1; Sma 375:2).

“However, when a person invested for his own benefit, he is not necessarily entitled to reimbursement from others who also benefited from his actions” (see Rama 264:4).

“Thus, if the tenant, who improved for his own needs, did not initially intend to demand reimbursement from the landlord, the landlord’s benefit is considered incidental, zeh neheneh v’zeh lo chaser, and he is exempt.

“Even if the tenant who improved for his needs did intend to claim from the landlord, Nesivos (246:6) indicates that the landlord has to pay only in situations where the tenant could have forced him to participate (such as communal projects, or a partnership).

“However, others disagree, especially in a case when the landlord remains with a capital improvement. They maintain that the landlord’s liability depends on the need for the improvement, as above” (Pischei Teshuvah 264:3, citing Shevus Yaakov 1:158; Pischei Choshen, Geneivah 8:[56]).

“Nonetheless, if the landlord indicated from the beginning that he was not interested in paying for improvements, as in this case, there is a further dispute whether he is liable” (Pischei Teshuvah 264:3).

“In cases when the landlord is exempt or refuses to pay,” concluded Rabbi Dayan, “the tenant can remove what he added (such as doors and heaters), provided that this will not ruin the building more than what it was beforehand. If the landlord refuses to allow the tenant to remove them, this indicates that he wants the improvements, and he is then liable for the going rate of the improvements.”

(See Pischei Choshen, Geneivah 8:24-25; Hayashar V’hatov, vol. 19, pp. 291-296.)

Verdict: Whether the landlord is liable, and how much, depends on several factors – the contract or agreement between them, the nature of the improvements, and the initial intent of the tenant.

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Rabbi Meir Orlian is a faculty member of the Business Halacha Institute, headed by HaRav Chaim Kohn, a noted dayan. To receive BHI’s free newsletter, Business Weekly, send an e-mail to subscribe@businesshalacha.com. For questions regarding business halacha issues, or to bring a BHI lecturer to your business or shul, call the confidential hotline at 877-845-8455 or e-mail ask@businesshalacha.com.