...
(c) The provisions of subsection (a) shall also apply to the execution of a mortgage or the realization of a pledge, except if the mortgage was registered before the commencement of this Law, or if it is stated in the mortgage deed or in a pledge agreement that the debtor will not be protected under this section."
(Ibid. in section 7).
In the Mr. Money case, the Supreme Court first ruled that the language of section 38 indicates that the defense of the alternative arrangement is dispositive - that is, it can be stipulated on it provided that it is "interpreted in the mortgage deed" (ibid.). in section 8). The Supreme Court further detailed the conditions necessary in order for the waiver of the temporary arrangement protection to be given validity. With regard to this, the Supreme Court opened by ruling that the waiver of the defense must be explicit (ibid. In section 9) and in general, he must mention both the section of the law and its content. However, the court ruled that the technical fulfillment of the demand was not enough, but that the lender was obligated to make it clear to the respondent that she had protection from the law for her residence and that she was waiving it (ibid. in section 10). With regard to the significance deriving from the Respondent's signature on the mortgage deed, the Supreme Court further held, in paragraph 11 of the judgment of the Honorable Justice Rubinstein, as follows:
"Indeed, it is a rule that a person who signs a document is presumed to have read and understood its contents. This is the case in general, and this is certainly the case where we are dealing with the signing of such a substantial document, such as a mortgage deed (Civil Appeal 1513/99 Datiashvili v. Bank Leumi Le-Israel in a Tax Appeal [8]; Civil Appeal 6645/00 Adv. Arad v. Even [9]). A person who signs a document without bothering to review it will not hear, usually, a non est factum argument or a similar argument (see Civil Appeal 1548/96 Union Bank of Israel in Tax Appeal v. Lupo (hereinafter - the Lupo case [10])). In our case, as the District Court held, this presumption was not contradicted insofar as the pledge of the apartment itself was a guarantee for the repayment of the loan. The Respondent knew and understood that this is what it does. This determination of the District Court is based on the evidence before it, and in fact it is no longer in dispute. The dispute focuses on a narrower section, which is whether the respondent knew and understood that it was waiving the defense of the alternative arrangement. As stated, the District Court answered this question in the negative. In this finding I find no reason for intervention. The fact that the mortgage deed contains a general statement by the appellant's counsel that he explained to the parties "the essence of the transaction that they are about to execute and the legal consequences deriving from it", and that he was convinced "that the matter was properly understood by them" is not sufficient to undermine the said factual determination of the District Court. It is not possible to understand from this statement what was indeed said and what was not said regarding the defense of the alternative arrangement, and the court pointed to the testimonies from which it learned that this issue was not explained to the respondent. Even the words that the respondent said before the District Court: that if the mortgage is not cancelled, "I will be lying in the street", cannot teach us anything about her knowledge and understanding at the time she signed the agreement. And things are clear.
- Thus, the appellant, who drafted the loan agreement (which, according to the District Court's determination, is a uniform contract), sufficed with a "technical" reference to the sections of the Tenant Protection Law and the Execution Law. She did not add anything on this matter - according to the trial court - orally or in writing. A "complete reading" of the waiver clauses, the wording of which was cited above, does not make a person from the Yishuv, who is not a jurist, aware of the nature of the waiver he makes. In fact, it is doubtful whether such a person is aware of the very right that he has. The claimant will argue that the lender should not place the borrower on his rights. Without establishing rivets with respect to this question in general, I cannot accept this argument in the circumstances of the case before us. The appellant had a duty - a duty of fairness - not to suffice with the uniform and obscure wording of the waiver clauses. It should have further clarified - whether in the framework of the documents or orally - the existence of the right to a temporary arrangement and the implications of waiving it."
- The Supreme Court based this ruling on the disclosure and fiduciary duties that apply to a banking corporation towards customers and service recipients. It was determined that these obligations - which are imposed by the banking corporations - apply even more strongly where the institution in question provides non-bank loans. With regard to these loans, it was determined that:
"Admittedly, caution should be taken against over-intervention in such loans, especially in light of the recognition that they can meet a real need that exists in the market, i.e., allowing people who are unable to obtain a loan in the banking system to find a source of credit from another source. Moreover, the fact that we are dealing here with loans given to those who cannot afford to receive a bank loan implies that these loans are given under conditions that reflect the high level of risk inherent in them from the perspective of the lender (see the explanatory notes to the proposed Law for the Regulation of Non-Bank Loans, 5753-1993, at p. 116; and see Civil Appeal Authority 5888/95 Credit Lines to Israel (Rishon LeZion) in Tax Appeal v. Nini [14]). However, these considerations - important as they may be - do not stand alone. There are other interests in front of them that tip the scales in favor of special attention to the protections afforded to borrowers in non-bank loans. The relationship between the borrower, who - sometimes desperately - needs a loan and can only obtain it in an out-of-bank way, and the lender opens the door to the abuse of the power differences and the gap in bargaining power. Leaving the borrower without a system of statutory protections as explicitly stated in case law is liable to increase situations in which borrowers will enter into unilateral, unfair, and ineffective contractual relationships. These borrowers may soon sink into a demanding and quick-winding mud from which there is no way out." (Ibid. In section 13)