THE JERUSALEM INSTITUTE OF JEWISH LAW
Rabbi Emanuel Quint, Dean

Lesson # 369 - (part 2) • Sell or Buy Option
Continuing with the topic of exercising the sell or buy option, we continue with the laws of “when a demand cannot be made”. If both parties want to sell and neither wants to buy, neither will make a demand; the parties may sell to a third party who offers the highest price for the combined shares of both Reuven and Shimon. If one of the parties has a relative or close friend who wants to purchase his share, both shares must be sold as one package. If both parties want to buy and neither wants to sell, or if both want neither to sell nor to buy they will remain as joint owners in the ownership of the land or personal property and together use the jointly owned thing. If the thing owned jointly does not lend itself to be used together, then if it can be rented, they will rent the thing and they divide the rental payments. Or either party may make a demand to the other to either lease or rent his part of the thing owned jointly at a rental fixed in the demand; then the other party must exercise his election. Here is an example given in the codes; Reuven and Shimon, brothers, inherited from their father a bath house or a building containing an olive press, neither of which lends itself to division. Reuven is wealthy and Shimon is poor. They may follow their father’s example. If he rented it out, they will rent it out and divide the rental, and even if the father did not rent it out they may rent it out and divide the rental if they find a lessee. Or if their father did not rent it out but used it for himself, and they do not find a lessee they may use the property as did their father and divide the income from the business.

There is an opinion that if their father did not lease if out they may not do so, if either protests. Or either Reuven or Shimon can demand of the other brother that he rent it at a fixed rental or lease at that rental to the brother making the demand. If the thing cannot be rented, the parties will agree or cast lots as to who will use it for a reasonable period and then the other party will use it for a similar period. If the usage by Reuven was not by agreement between the parties but rather was used by him because Shimon was not present, or if he was present but did not stop Reuven, then Shimon cannot demand that he be given equal usage. Rather the equal usage will commence from the time that Shimon protests that he too wants to use the thing and then one will use the thing and the other will therefore use it for a similar period of time. If Reuven leases the thing without the consent of Shimon the rental must be divided equally between them. Whenever an equal division is mentioned it assumes the parties are equal owners in the realty or personal property. If one owns a greater share, then they share proportionately as to income and as to time. All of the foregoing is subject to ruling of a Beit Din if the parties cannot agree.

Binding the Parties
There must be a kinyan made to bind Reuven and Shimon. Reuven will bind himself by the kinyan to abide by Shimon’s election to buy or sell, and Shimon will bind himself by kinyan to complete the transaction once Reuven makes the demand.

The simplest way to make the kinyan is for Reuven to hand his handkerchief to Shimon and for Shimon to hand his own handkerchief to Reuven. If Reuven does not bind himself by a kinyan, he may rescind his demand even after Shimon has exercised his option whether to sell or to buy. Similarly, Shimon may rescind the option he has made until such time as he binds himself by kinyan to complete the transaction according to his election. Thus, if Shimon first elects to sell, he may rescind this choice and decide to buy and may continue to change his mind until he binds himself by kinyan to abide by his choice.

Should Shimon refuse to make a kinyan, Reuven may request that Beit Din compel Shimon to make a choice that will be binding upon him. If Reuven rescinds, then the parties are joint owners as they were before. If Shimon rescinds his choice, the parties will still not remain joint owners. Shimon can only change from sell to buy or from buy to sell. Shimon cannot insist that the parties remain joint owners since Reuven has made demand that Shimon exercise his election to sell or buy. If Reuven, before making a kinyan, rescinds his demand the parties will remain joint owners. If either party thereafter makes a demand, the price in the original demand will be the same unless it can be shown that the value of the interest being sold has changed.

Combining Partition with the Sell or Buy Option
Reuven and Shimon are the joint owners of two houses that they inherited from their father or purchased together as joint owners. The laws are the same if they inherited two fields or two items of personal property, such as automobiles. Assuming (1) each house has the requisite size to be partitioned; (2) the houses' uses are identical, and (3) the houses are similar in size and value, then Reuven may demand that Shimon exercise the option to take title to whichever one of the houses he desires and Reuven will take title to the other house. Shimon may not reply that they should partition each house, but must exercise the (exchange) sell or buy option if Reuven insists upon his demand. Neither party may demand that the other exercise the sell or buy option for both houses as one unit. What has been said about two houses is true for two apartments within the house.

However, one apartment in a building is not always similar to the other apartment and the upper floor is not similar to the lower floor. A division of the house into two apartments may result in one apartment having better access to the street than the other apartment with the differences sometimes being multiple. Reuven may make a demand that Shimon either sell or buy the entire house which has two dissimilar apartments. The question of whether the apartments, or a commercial building and a residential building are the equivalent, and any other similar situations, are governed by the decision of the Beit Din. Whenever Beit Din decides that the thing is not divisible and partitionable, then neither party has the right to demand that the other exercise the option to sell or buy. Assuming that each house has the requisite size to be partitioned, the houses' use are identical and that the houses are not similar in value, then Reuven can demand that Shimon exercise his option to take either the more valuable house and pay to Reuven the difference in value, or take the less valuable house and Reuven will pay him the difference in value.

The subject matter of this lesson is more fully discussed In Volume 5, Chapter 171 of A Restatement of Rabbinic Civil Law by Emanuel Quint. Copies of all volumes can be purchased at local Judaica bookstores. Questions to quint@inter.net.il

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