Lesson # 344 (part one) •Right of First Refusal Reuven is the owner of a piece of real estate that he wishes to sell to Levi. Shimon, is the owner of a parcel of land contiguous (touching) to the land being sold by Reuven. Whenever Reuven desires to sell this land to Levi, he must first offer it to Shimon upon the same terms offered to Levi. If Reuven sells the land to Levi without first offering the land to Shimon, Shimon can demand that Levi transfer the land to Shimon upon reimbursing Levi for the purchase price that Levi paid to Reuven. Levi is deemed to be Shimon’s agent in purchasing the land on behalf of Shimon; the witnesses to the sale are authorized to write a new deed from Reuven to Shimon; no new transfer is necessary to transfer title from Reuven to Shimon. This applies to all interests in real estate, whether the real estate is commercial, industrial or residential. It applies to all things attached to real estate. There is ample authority that it applies to seats in a synagogue. There are communities where the synagogue sells the seats and permits the purchaser of the seat to sell it to a third person, usually someone who must first be approved by the synagogue. Thus if Reuven wishes to sell his seat to Levi, Shimon who owns the next seat may exercise his right of first refusal against Levi. Assume that Reuven and Naftali are partners or joint owners of the land, whether as joint heirs of the former owner or having purchased their interest in the land as joint owners. Reuven desires to sell his interest in the land to Levi, who is not a contiguous owner, or even to Shimon who is a contiguous owner. Naftali may exercise his right of first refusal even against Shimon. This law applies even if Reuven sells his share to a woman or a minor orphan, who is not subject to the law of right of first refusal. The strength of the partnership relation- ship holds true even if Reuven and Naftali are not partners in the partnership of the land but are partners in a different business. If Reuven sells his interest to Levi or even Shimon, Naftali may exercise his right of first refusal. All of these laws apply if Reuven is not damaged by it. However, there may be a situation where Levi has strong financial ability and Reuven permits Levi to pay the purchase price over a period of time. Shimon, on the other hand, is not in a strong financial position; Shimon may have to pay the entire purchase price to Reuven rather than receive the same terms as are given to Levi. If Reuven grants Levi terms and Shimon has at least the same financial position as does Levi, Shimon may avail himself of the same terms. The burden of proof is on Shimon to show that he has at least equal financial ability so that Reuven can rely upon it. As was previously stated, the law of the right of first refusal, forces a buyer of real estate (and perhaps the seller) to do that which is right and benefits the contiguous neighbor. Therefore it must be strictly construed against the interests of the contiguous neighbor since the halacha confers a benefit on him for the sake of doing the right thing. There are individuals and situations in which, if the law were to be followed, it would not be the right thing for the purchaser, Levi and/or the seller Reuven. The halacha has exceptions to this law. If the facts of the case fall into one of the exceptions, then the law of the right of first refusal does not apply. We shall now begin to discuss some of these situations where the right of first refusal does not apply: 1. The law of the right of first refusal does not apply if Reuven gives his land to Levi by gift. Shimon, the contiguous land owner cannot ask that the law apply and he will pay to Reuven the appraised value of the land. The theory is that when Reuven gives the land to Levi, he wants Levi to remember the gift when he uses the land. If the gift is converted by Shimon into money, when Levi will have spent the money he will forget that Reuven gave him the gift of the land. Therefore it would not be the right thing to Reuven to set up a situation whereby Levi will forget that it was Reuven who gave him the land as a gift. In the next lesson, IYH we shall discuss several tests to ascertain if the transfer is really a gift or just a subterfuge to evade the law of the right of first refusal. The subject matter of this lesson is more fully discussed in volume V chapter 171 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 R'ei Homepage]
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