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Reuven wants to lend Shimmon money backed by a piece of real estate that belongs to Shimmon. Instead of lending money, they make a deal that Reuven will purchase the real estate for the amount of money and as part of the deal Shimmon has an option to buy back the real estate at a later time for a pre-determined price which is higher than the original amount.

So, for example, Reuven purchases it for $10,000 and Shimmon has a contractual option to buy it back at $12,000 a year later.

Are there any Ribbis implications in this contemplated transaction, and if so what?

Yishai
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    I can't see the problem, it's just an option to buy with no guarantees. Suppose the piece of land tanks in value, Shimon won't buy it. The distinction between ribbis and iska is that the former guarantees a return. – Shalom Dec 09 '14 at 22:47
  • @Shalom, I guess my question is that really all this does is move some things around. A non-recourse loan with a lien on the property would have all the same end result, but that would obviously be Ribbis. Is by simply transferring ownership earlier enough, even MideRabbonon? – Yishai Dec 09 '14 at 23:11
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    @Yishai It doesn't just move it around. As Shalom said the land could tank in value and Shimon won't buy it back. Shimon wins. Alternatively, if the land is worth much more so it is unlikely to tank, then Reuven could buy it for 10K and then run away before signing the option. – Double AA Dec 09 '14 at 23:45

2 Answers2

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Seems ok, but maybe not halcha limaaseh. See Shulchan Aruch Yoreh Deah siman 174 and Pischei Tshuvah #1 in the name of the Noda BiYehuda. He says the Mechaber's case of a sale with an option to be mivatel the sale at a later date is where the Mechaber says the fruits eaten would be ribbis. However, where the stipulation is to sell the land back, meaning till now it was a real sale, the Noda Biyehuda thinks it would be fine 'if not for the fact that he is scared to say such a thing'. Which is why it might not be a real ruling.

user6591
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I don't see a problem in this scenario. Bava Metzia 65b says outright that it is okay to use land as collateral, which will pass into the lender's property when the borrower defaults on the loan. On that basis, treat this transaction as a loan and not as a sale: Reuven lends Shimon $10,000 and uses Shimon's field as collateral. The condition of the loan is that Shimon needs to return this money within the space of, say, a month, or else the field becomes Reuven's property. Once it has become the property of Reuven, what rule could there possibly be to forbid his selling it back at a different price? You could even call it a sale if you wanted to, since the end result is the same either way: Reuven pays $10,000 and acquires a piece of land, and one year later Shimon pays $12,000 and acquires it back.

Note, that for this to not fall into the trap of constituting a possessory mortgage, it would be necessary to stipulate at the time of the loan that the land becomes Reuven's from this point in time if Shimon defaults at the end of the pre-determined period (Hilkhot Malveh veLoveh 6:4, Tur/SA Yoreh Deah 164:4).

Shimon bM
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