Bava Metzia 66 - Heter Iska and Penalty for Late Payment


Heter Iska is a document that lays down the terms and conditions for structuring loan transactions in such a way that they become an investment rather than a loan; consequently, the investor’s return of his capital has the legal status of profit on an investment, rather than interest on a loan.
If one made a loan to someone on the security of the borrower’s field, so that if the borrower does not pay back after three years, the field is forfeited to the lender, then indeed it is the lender’s, although it is worth more than the amount of the loan.