Ethics

For the week ending 7 December 2002 / 2 Tevet 5763

An Honest Broker

by Rabbi Mendel Weinbach zt'l
The Color of HeavenArtscroll

Question:

A real estate broker is an agent for selling a house which he knows has some defects of which the potential buyer is unaware. Does he have a responsibility to inform the buyer even though this may ruin his prospects for making this transaction?

Answer:

In the Talmud (Mesechta Bava Metzia 50b) a distinction is made in regard to the remuneration responsibility of a seller or buyer who overpaid or underpaid depending on the discrepancy between the normal price and the amount paid. If this difference is more than a sixth the transaction is null and void. If it is an exact sixth the deal is valid but the difference must be returned to the injured party. If the difference is less than a sixth we assume that the injured party forgives such a slight discrepancy and there is no need for compensation.

Based on this rule it would seem that the broker would not be required to reveal the defect if it lowered the value of the house by less than a sixth. There are two considerations, however, which compel us to conclude that he must make the disclosure.

First of all there is the question raised in Shulchan Aruch Chosen Mishpat 227:6 as to whether it is permissible to deceive someone in regard to a sum less than a sixth of the value of the object sold even though he cannot compel him to make remuneration. In addition there is the ruling of the halachic authority "Kiryat Sefer" (Chapter 15 of Laws of Sale) that the concept of a buyer forgiving a discrepancy of less than a sixth applies only to a situation in which the seller deceived the buyer in regard to the price. Should he deceive him, however, in regard to weight, size or any other deficiency there are no grounds for assuming that the buyer waives his right for redress.

Since the broker is an accomplice to such deception it is incumbent upon him to reveal the houses defect if knowledge of such a defect would have discouraged the buyer from purchasing the property at the stipulated price.

(Adapted from the Response of Rabbi Yitzchak Zilberstein, Rabbi of the Ramat Elchanan community in Bnei Brak.)

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