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Heter Iska Terms

The Heter Iska terms and conditions specified herein (this “Heter Iska” or “Iska”) govern all loans and related financial transactions between RBI Mortgages, LLC dba RBI Private Lending and RBI Private Lending LLC, and its clients, referred to as the Receiver, where such transactions might otherwise violate Jewish law, also known as “Halacha”.

Definitions:

As used herein, 

Beth Din” means an Orthodox Jewish rabbinic court affiliated with KFI, or approved by KFI.

KFI” shall mean KFIC INC., dba the Kosher Financial Institute, a New York corporation.

Provider” means RBI Mortgages, LLC dba RBI Private Lending and/or RBI Private Lending LLC.

Receiver” means the borrower Including the co-signer(s), co-borrower(s) or guarantor(s) identified herein as Receiver.

Ribbis” means the interest charged on loans or deposits.

Transaction” means the loans, advances, mortgages, guarantees and credit facilities between the Receiver and Provider and related documents.

Iska Investment:

The Provider and the Receiver mutually agree that any Transaction shall, to the extent that such Transaction may violate the Jewish laws of Ribbis, be governed by this Heter Iska and shall be structured as an Iska investment as set forth below: 

  • All funds advanced by the Provider, referred to in the loan documents as the loan amount, are provided to the Receiver in exchange for a proportionate interest in the Receiver’s Halachically permissible investments that are most beneficial to the Provider.

 

  • The Provider shall receive 95 percent of all profits arising from said investment, and the Receiver shall be entitled to 5 percent of the profits as compensation for managing the investment. Losses sustained from the investment shall be allocated to the Provider subject to the obligatory verification as described below. However, under no circumstances will the Provider have any liability above the amount invested.

 

  • Upon the investment generating sufficient profits, the principal and profits shall be paid to the Provider as per the Transaction schedule and terms. Any principal payments made by the Receiver shall be construed as a pro rata repurchase of the Provider’s share of the Iska investment.

 

Profit/Loss Validation:

Any claim of an Iska investment loss or lack of profits by the Receiver shall proceed as follows:

  • The Receiver must notify the Provider and KFI by certified mail within 7 days following any default of payment due pursuant to the Transaction, indicating the lack of profit and/or loss of principal and its intent to verify its claim (the “Notice of Exemption”), time being of the essence. If no such notification is made within the above timeframe, no such claim of loss or lack of profit by the Receiver shall be valid or admissible.

 

  • It is agreed that the Receiver’s claim of any principal loss will lack evidentiary validity and will not be accepted unless such claim is verified by two valid witnesses as defined by Jewish law. The Receiver bears the responsibility of verifying the amount of profit by giving testimony under severe oath before and under conditions acceptable to Beth Din.

 

  • All claims, whether concerning the loss of principal or confirming profit, must be verified within ninety (90) days of defaulting on any scheduled payments, subject to additional time if required by Federal or applicable State law. Time being of the essence, and if no such compliant verification had been made within the above time frame, no such claim by the Receiver shall be valid or admissible as evidence and the claim shall have no force or effect. Failure to notify, ‎or verify a claim of loss ‎or profit in the time specified shall be deemed an admission that sufficient profits have been generated and that the Provider shall be entitled to a sum equal to the principal, interest, fees, and all other obligations of the Receiver under the Transaction documents.

 

  • The parties agree that all the evidence shall be presented under the sole and exclusive jurisdiction of a distinguished Beth Din, and such proceeding must be in the presence of the Provider or its designated representative.

 

Should the Receiver claim a loss or lack of profit, the Provider reserves the right to demand immediate and full repayment of the Iska principal balance, per the acceleration clause outlined in the Transaction documents. Moreover, the Provider is entitled to exercise its foreclosure rights, pursuant to the Transaction documents, unless and until the Receiver has met the verification requirements specified within this Iska agreement.

 

Co-signer co-borrower guarantor:

It is agreed that any Transactions concerning a co-signer or co-borrower that violate the Jewish laws of Ribbis shall also be structured as an Iska and shall be governed by this Heter Iska.

 

Conciliation:

It is agreed by the parties, that the Receiver shall have the option to conciliate with the Provider to bypass the investment loss or profits verification requirements described above, by making all payments as specified in the Transaction documents in accordance with the terms, conditions, and schedule of said documents. It is further agreed that when this option is utilized, the Receiver shall be entitled to all gains exceeding the conciliation amount.  Any deduction of principal, points, interest, fees, or funds advanced in escrow which violates Jewish law regarding interest, shall reduce the principal balance of this Iska. However, the conciliatory payments described in this Paragraph shall be equal to the total amount due pursuant to the Transaction documents.

 

Repayment, Selling the Transaction Documents:

To effectuate the termination of the Iska upon selling the Transaction (Promissory Note) to the secondary market, the Receiver hereby appoints the Provider to act on its behalf to secure a loan equal to the outstanding balance of this Iska at that time from a party not subject to the laws of Ribbis (Substitute Provider) in a manner that does not contravene any Ribbis laws. The Provider shall accept the funds procured from said loan as repayment of the Iska owed to the Provider and as a buyout of the Iska. It is agreed that any surplus funds from the loan will be retained by the Provider as payment for their efforts and brokerage service. If funds received by Provider from the Substitute Provider total less than the balance owed on the Transaction documents, the Provider will accept this lesser amount as repayment of the Iska, and Receiver will owe the Substitute Provider an amount equal to the scheduled outstanding balance on the Transaction documents.  When this occurs, all Iska terms will cease, and:

Receiver shall be obligated to said Substitute Provider pursuant to the terms and conditions specified in the Transaction Documents, including being obligated to pay all amounts owed under such Transaction documents.

 

Mutual Representations and Warranties:

Each party hereto represents and warrants to the other party (which representations and warranties shall survive the execution and delivery of this Heter Iska) as set forth below:

  • Such party (i) has full power and authority to enter into this Heter Iska, to incur the obligations as contemplated hereby, and to carry out its provisions; and (ii) it has taken all action necessary for the execution and delivery of this Heter Iska and for the performance of each of its obligations hereunder, as evidenced by corporate resolution(s) or other authorization.

 

  • Upon execution and delivery by each of the parties hereto, this Heter Iska shall be the legal, valid and binding obligations of such party and shall be enforceable against such party in accordance with its terms.

 

 Arbitration:

Any dispute or controversy arising out of or relating to the interpretation or validity of this Heter Iska shall be determined by arbitration administered by a KFI-affiliated or approved Beth Din in accordance with Jewish Law. Judgment upon any award rendered in such arbitration will be binding and may be entered in any court having jurisdiction thereof.

 

Entire agreement:

This Heter Iska shall supersede prior or contemporaneous agreements, written or oral, between the parties with respect to the underlying Transaction. In case of conflict between any of the terms and conditions of this Heter Iska and any Transaction documents, the terms and conditions of this Heter Iska shall control and prevail. All terms and conditions contained in the Transaction documents, including but not limited to the payment amount, term, and method, which do not contradict this Heter Iska, are hereby incorporated by reference and made a part hereof. Furthermore, the terms of this Heter Iska shall not supersede any Jewish law-compliant Iska personally signed between the Provider and Receiver.

 

Binding agreement:

It is expressly agreed that if for any reason the Provider or Receiver are not familiar with the Iska concept, the Iska terms will nonetheless prevail, and each party shall enjoy all rights and bear all obligations assigned to the Provider or Receiver under this Heter Iska.

 

Severability:

If any part, term or provision of this Heter Iska is determined to be invalid, illegal or unenforceable for any reason, such determination shall not affect the remainder of this Heter Iska, which shall continue to be in force.

 

Law:

The terms of this Agreement have been finalized through an Agav Sudar binding procedure, as set forth by sages of blessed memory, before a distinguished Rabbinical Court; unlike a simple assurance and unlike a standard form of contract; it is all confirmed and established.

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