Lesson # 347 (part four) •Right of First Refusal The right of first refusal may be exercised only by Shimon, the contiguous neighbor to the land being sold by Reuven to Levi. Shimon must be the neighbor both during the time that the land is sold by Reuven and also when Shimon exercises the right. If he is the contiguous owner only when the land is sold but no longer the owner when the right of first refusal is sought to be exercised or if he is the contiguous owner when he attempts to exercise his right of first refusal but was not the contiguous owner when the land was sold by Reuven, he may not exercise the right of first refusal. For example, on January 1, Reuven sells his land, parcel#1 to Levi. On January 2, Shimon is the contiguous neighbor to Reuven’s land by virtue of the ownership of parcel #2. On January 2, Shimon before attempting to exercise his right of first refusal, sells parcel #2 to Jacob. Neither Shimon nor Jacob can exercise the right of first refusal, Shimon because he is no longerthe contiguous owner to parcel #1, and Jacob, because he was not the contiguous owner on January 1. Shimon did not, together with the sale of parcel #2, transfer to Jacob the right to exercise the right of first refusal that Shimon had on January 1. Levi does not have to act in a just and honorable manner to Shimon since Shimon sold his land, and not to Jacob because Levi bought parcel #1 before Jacob came into the picture. Shimon may not assign his right of first refusal to another person. There must be an immediate exercise by Shimon of the right of first refusal. That is, Shimon is given the amount of time that it takes for a purchaser to go to his bank and obtain the money to complete the purchase, and to go to Beth Din to get an order to rescind the sale from Reuven to Levi, and to request Beth Din to order a deed from Reuven to Shimon, if Reuven has already sold the real estate to Levi. If the sale has not yet been completed, Shimon is given sufficient time to go to his bank to get the funds and to go to Beth Din to obtain an injunction to stop the sale from Reuven to Levi. If Shimon does not immediately commence his lawsuit in Beth Din, he loses his right to exercise his right of first refusal. If Beth Din is closed or if there is a storm that prevents Shimon from going to Beth Din, or something similar, he does not lose his rights of first refusal until he has time to get to the Beth Din after it is in session again or after such storm abates. If the sale from Reuven to Levi is done surreptitiously, the time for Shimon to exercise his right to first refusal begins with the time that the sale is publicized to the people of the community or from the time that Shimon has actual knowledge of the sale, whichever is earlier. If there is a dispute between Levi and Shimon whether Shimon had knowledge of the sale, Shimon may take an oath that he had no knowledge and he will be believed. The price to be paid by Shimon to Reuven (or to Levi if the sale between Reuven and Levi has already been completed) is the price that Levi offered to Reuven and Reuven agreed to accept, or that Reuven offered to sell for and Levi agreed to pay (or actually paid to Reuven if the deal between Reuven and Levi was completed). If the value of the land appreciates between the time that Reuven sells the land to Levi and the time that Shimon exercise his right of first refusal, Shimon need pay only the price that Levi paid. If the land declines in value between the time that Reuven sells the land to Levi and the time that Shimon exercises his right of first refusal. Shimon must pay the price that Levi paid. Levi pays Reuven $100 for the land. The land is appraised as of the date of the sale at $200. If Reuven would have sold the land to any purchaser for $100, Shimon need pay Levi only $100. (Reuven was hard pressed for immediate cash and would have sold the land to any purchaser for $100.) However, if Reuven sold the land to Levi at a reduced price because of his special relationship with Levi and would have sold it to anyone else for $200, Shimon must pay Levi $200, if Shimon exercises his right of first refusal. Levi need not share the excess $100 with Reuven. In the event that there is a difference of opinion between Shimon and Levi as whether Reuven would have sold the land to others for $100, the burden of proof is on Shimon. Shimon may waive his right of first refusal either to Levi or Reuven. There are situations in which Shimon can waive to Levi his right of first refusal prior to the sale by Reuven to Levi. Levi consults with Shimon and advises him that Reuven is about to sell his field to Levi. Shimon advises Levi to purchase the field. Shimon has not waived his right of first refusal. Shimon can claim that he intentionally wanted Reuven to sell to Levi so that there would be established a realistic price for the field. Until now Reuven has asked Shimon for an exorbitant amount, knowing that Shimon wanted to buy the field contiguous to his. If Shimon waives to Levi his right of first refusal by a kinyan, then the waiver is binding on Shimon. Shimon advises Levi that he waives his right of first refusal and Levi hands a handkerchief to Shimon and Shimon takes it into his hand. Also if Shimon, in front of two witnesses advises Levi that Shimon waives his right of first refusal, the waiver is binding. Levi tells Shimon that he will purchase the land from Reuven and then transfer the land to Shimon. Shimon responds that he does not want Reuven’s land. Shimon may not thereafter exercise his right of first refusal against Levi. If Shimon waives his right of first refusal, then the waiver is binding in almost all situations, even if it would not have been so binding if requested by Levi. For example, Reuven consults Shimon and advises him that he wants to sell his land to Levi, and Shimon tells him to go ahead and sell to Levi. The waiver is binding on Shimon if he has been told of the proposed sales price. If Shimon has not been told the proposed sales price, it is not binding on Shimon. Shimon can plead that he advised Reuven to go ahead and sell to Levi so that he would then see the realistic purchase price. The subject matter of this lesson is more fully discussed in volume V chapter 175 A Restatement of Rabbinic Civil Law by E. Quint. Copies of all volumes can be purchased via email: orders@gefenpublishing.com and via website: www.israelbooks.com and at local Judaica bookstores. Questions to quint@inter.net.il [The Parshat Ki Tavo Homepage]
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