Riding the Market

Mr. Mandel sat across from his chavrusa, the Gemara open before him, but his mind was wandering.

“I’m really struggling with a decision,” he finally confided. “I’m between jobs right now, and rent is due next week. I don’t have enough cash.”

His chavrusa looked up. “Did you speak to your landlord?” he asked.

“I did,” Mr. Mandel replied. “I asked for a two-month extension until I find work. He was apologetic but said he can’t wait – he relies on the rent to cover his mortgage payment.”

“What are your options?” the chavrusa asked.

Mr. Mandel hesitated. “I have a stock portfolio that I intended to put toward marrying off the kids,” he replied. “Baruch Hashem, the market has been doing very well lately, and it may keep rising. Selling now means giving up future gains.”

“But the rent is due,” his chavrusa said gently.

“I know,” Mr. Mandel sighed. “But I was wondering whether ‘mesadrin l’baal chov’ applies here. Beis din doesn’t strip a debtor of everything he owns. Maybe I’m not required to liquidate assets – especially ones meant for the long term – just to pay immediately.”

His chavrusa frowned. “That principle ensures basic living expenses,” he said. “It doesn’t allow someone to hold investments so he can profit while another person waits for money he needs.”

“That’s exactly what I’m unsure about,” Mr. Mandel replied. “The landlord needs the money, and I don’t want to act improperly, but these stocks aren’t cash in hand. Selling them now means losing the long-term benefit.”

“This isn’t something to decide yourself. Ask Rabbi Dayan,” the chavrusa suggested.

Later that day, Mr. Mandel called Rabbi Dayan and asked:

“Does mesadrin l’baal chov apply in this case? Must I sell part of my stock portfolio?”

“The Torah (Vayikra 27:8) states that if a person pledges his erech (age-based value) to the Temple treasury but it is beyond his financial means, the Kohen evaluates how much he can pay, and the person pays only that sum,” replied Rabbi Dayan. “The Gemara (B.M. 114a) extends this to other pledges to the Temple treasury (hekdesh).

“The Mishna (Arachin 23b) teaches that we leave the person the cost of his minimal living and professional needs, and require him to sell any additional assets to pay his pledge. This process is called siddur (arrangement) or mesadrin.

The Gemara (B.M. 114a) discusses whether we similarly ‘arrange’ for a borrower who defaults and allow him to retain enough for his minimal needs until he can pay the remainder. Shulchan Aruch, following most Rishonim, rules that indeed mesadrin l’baal chov (C.M. 97:3).

Shulchan Aruch cites a further dispute between the Rishonim regarding whether we apply mesadrin to debts other than loans, such as rental payments. We generally follow the second opinion (v’yeish omrim) that applies mesadrin to other forms of debt.

However, this allows the person to keep what he needs for his basic necessities. Additional assets, even household items, the person must sell or give to the creditor to pay his debts (see Pischei Choshen, Halvaah 2:16–22).

Furthermore, the Mishna (B.M. 111a) extends the mitzvos of b’yomo titein s’charo and lo talin, which require us to pay wages on time, to rental payments on movable items. Shulchan Aruch (C.M. 339:1) cites an opinion that this does not apply to real estate rentals, but the Acharonim note that numerous sources do apply it to real estate rentals. Because this entails a potential violation of a Biblical prohibition, they recommend being stringent (Gra, Ketzos, and Pischei Teshuvah 339:1).

Furthermore, the Chafetz Chaim rules (Ahavas Chesed 1:9:7) that when a person has liquid assets, such as money available in the bank or entrusted with others, he is required to withdraw it to pay his workers on time. Presumably, the same would apply to assets in a stock portfolio that are liquid, even though the person would prefer to keep the stocks invested.

Even when the prohibition of lo talin does not apply, there is an additional Rabbinic injunction, based on Mishlei (3:28), not to stall payment of debts when you can pay (C.M. 97:3; 339:7).

“Thus,” concluded Rabbi Dayan, “you should certainly sell part of the stock portfolio to pay the rent on time. Even after the due date, you are expected to sell and pay as soon as reasonably possible.”

Verdict: A person who has liquid investments should sell them to pay his debts or rent on time or even after the due date has passed.