Religious laws in contracts
I just closed on a purchase of several properties. In the closing documents the lender included a document called Shtar Isko. Below is a description of what that is. It has to do with Jewish law that prohibits charging interest amongst Jewish people. Has anyone else had a lender request them sign a similar document? I did not feel comfortable and the lender did not try to make me. But I just felt strange that the last minute they decided to add a religious document to the contract. I am Jewish and I didn't know what to make of it.
"Jewish Religious Law strictly prohibits the paying or receiving of interest on loans made between
Jews. However, when monies are advanced in the course of a business transaction, an agreement
may be entered into, whereby the provider and receiver of these funds are considered equal
partners. This partnership is based upon the stipulation that, upon request, every loss must be
attested to by two trustworthy witnesses, and all profits verified by oath. All consequent profits
and losses are then equally shared. However, in order to avoid these very stringent requirements,
the provider of the funds, under this “Shtar Isko”, agrees to waive his share of the profits in lieu of
receiving a fixed percentage of the money advanced. This percentage is then considered profit,
rather than interest on a loan. This agreement becomes effective when the receiver of the funds
executes a form as set below.
Jewish Religious Law strictly prohibits the paying or receiving of interest on loans made between
Jews. However, when monies are advanced in the course of a business transaction, an agreement
may be entered into, whereby the provider and receiver of these funds are considered equal
partners. This partnership is based upon the stipulation that, upon request, every loss must be
attested to by two trustworthy witnesses, and all profits verified by oath. All consequent profits
and losses are then equally shared. However, in order to avoid these very stringent requirements,
the provider of the funds, under this “Shtar Isko”, agrees to waive his share of the profits in lieu of
receiving a fixed percentage of the money advanced. This percentage is then considered profit,
rather than interest on a loan."