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Shoftim-A Real Estate Agent who Siphoned Off Funds



I work as a real estate agent. Recently a builder granted me exclusive rights to sell apartments in the condominium he is completing. We agreed that I would be paid ten thousand dollars for each apartment I sell. We made up to sell the apartments for three hundred thousand dollars each. In order to earn a little extra, I told the buyers that the price is three hundred twenty thousand dollars but in the contract we can only write three hundred thousand dollars because the seller wishes twenty thousand in cash in order to lighten his tax load. Afterwards, I gave the seller three hundred thousand and kept the extra twenty thousand for myself. I already sold three apartments in this manner. One of the buyers commented that he knows that I am keeping the extra twenty for myself but he doesn’t care because it is still a worthwhile deal. Was I acting properly, and if not do I have to return the money to the buyer or give it to the seller? How about the customer who realized what I was doing?


This is a common ploy of dishonest agents. Rav Mendel Schaffrin wrote (Hayashar Vehatov vol. 2 page 21) that the price is the price that was set by the seller and any extra money taken by the agent is theft which must be returned to the buyer. He says that until the agent returns the money he is posul to act as a witness like any other thief, unless he erred like you and when he realized that he acted improperly, he returned the money.

There is a similar case which is discussed in the Shulchan Aruch (185, 1). The owner of an object asked an agent to sell an object at a certain price, but the agent sold it to a customer at a higher price. The question is: who keeps the extra money that the agent got from the customer. The Shulchan Aruch writes that the extra money belongs to the owner of the object and not to the agent. The Sema (185, 2) explains that the reason is because the owner never meant to give anything extra to the agent. It is just that he erred in thinking that he couldn’t get more, or he needed the money quickly. Since the object belongs exclusively to him he is entitled to whatever was paid in exchange for his object.

Thus, we have confirmation that the agent is not entitled to the extra funds that he received by deceiving the customer. The question is only why in the case in the Shulchan Aruch the extra money goes to the buyer and Rav Schaffrin said that extra money must be returned to the customer.

It would seem that the explanation is that in the case of the Shulchan Aruch the agent intended to sell the object as an agent of the owner. He erred only in thinking that since it is by virtue of his efforts that the customer paid a higher price, therefore he deserves the extra money. The Shulchan Aruch teaches us that this is incorrect since the object belonged to the owner and not the agent, and consequently, the one who is entitled to the profit is the owner.

However, the agents who sell at a higher price and keep the money for themselves justify their behavior in the following way. Rav Schaffrin writes in his article that they say that they consummated two sales. First, they sold the apartment to themselves at the cheaper price and then, after they bought the apartment for themselves, they resold it at the higher price. Thus they are entitled to the difference in price. The result is that the sale which they made on behalf of the owner (to themselves) only netted the smaller amount and therefore the extra money must be returned to the buyer and not the seller.

Rav Schaffrin writes many reasons why the justification of the agents does not stand up. One of his arguments is that if the agent was purchasing on his own behalf he would not be entitled to any fee as an agent because one may not be both a party to a sale and an agent at the same time. One is an agent only when he acts on behalf of others. This is especially true in your situation where the builder paid you a fixed price to sell on his behalf. Another proof he offers that the agent was not a buyer is that the owner has to intend to sell to his buyer and here he did not intend to sell to you.

It would seem that based on these reasons, the ruling that the additional funds must be returned to the buyer is still open to debate because effectively the agent was acting as an agent, even if he did not think so.

It would seem that the issue whether the extra money which you took must be returned to the buyer or passed on to the seller is very pertinent to your particular situation since one of your customers realized what you were doing but agreed nonetheless. If normally the extra money must be returned to the customer, then in the case where he agreed even after realizing what you were doing, you would not need to give him anything because he was mocheil the debt. However, if the money must be paid to the seller then it would seem that even in this case the seller is entitled to the money since he wasn’t mocheil anything.

In truth, it seems that in any case you may keep the money which was paid by the one who realized that you intended to pocket the money because this customer never intended that the money should go to the seller or to be a payment for the apartment. He was basically paying you a bribe. It was wrong to do what you did. However, since you were the exclusive agent the only way to buy the apartment is through you and by paying you a bribe. Since the customer willingly gave you a bribe you needn’t return the bribe.

One can deduce this from the Shulchan Aruch (9, 1) who rules that a dayan who received a bribe must return the money to the one who gave the bribe only if the one who gave the bribe asks for it. The reason (See Shevus Yacov 1, 135) one need not return it otherwise is because we understand that if the one who gave it doesn’t ask for it back he is mocheil the debt. Therefore, here where he said right away that he is giving it to you willingly, you can interpret his actions to mean that he doesn’t mind if you keep the money.

In conclusion, it was wrong for you to add to the purchase with intention of keeping the money for yourself. In general, you must give the money either to the seller or the buyer but you may not keep it yourself. However, the money you received from the one who saw through your scheme you may retain.










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