I am about to enter contract to have a house built from a Jewish builder, the contact states that if I am late in my payments, I will be charged 12% interest. I asked the builder if we should make a heter iska to circumvent the ribbis issue. The builder said he is under the impression that no heter iska is needed as the contract is between me (the owner) and a business entity (which he the builder owns) and not him personally. Is that correct?
Thank you for your question.
The halachos of ribis apply not only to a privately-owned business, such as the one the builder owns, but even for a publicly traded company, such as big banks, etc. In fact, in Eretz Yisroel, all of the banks have signed on a heter iska, including numerous major companies. When the ribbis is agreed upon beforehand even with a company, according to many poskim is forbidden, and he shouldn’t accept the payment on it! Besides, one of the ramifications of taking ribbis, is to forfeit eligibility to rise for t’chiyas hameisim, and even if it wouldn’t technically apply in this instance, it is not an issur he wants to play around with. Therefore, you might want to tell the builder to speak to his local Rov, and that it is in his “best interest” (pun intended) to sign a heter iska with you. If he wants, a heter iska for his business can be arranged for him, by calling 972 -53-311-0820 ext. 7.
Minchas Shlomo 28, Chelkas Yackov 3-190, Bris Yehuda 7- 24 thru 27, Bris Yehuda Ikrei Dinim 7-33,34.