The Case
Charles put his private home on the market for sale. Hymie, his next-door neighbor, was interested in the property and offered to match any price Charles received from the outside. By word of mouth, Charles found Ralph, a customer who was willing to pay 2.7 million dollars upfront for the property and go to closing within two weeks. Charles contacted Hymie and notified him of Ralph’s offer. Hymie agreed to match the purchase price. However, he requested a mortgage contingency contract with a thirty-day window to obtain a loan from the bank. Hymie reassured Charles that he was in good standing with the bank and was probably eligible to receive a loan, but Charles rejected Hymie’s offer in favor of Ralph’s immediate cash payment. Charles signed with Ralph and accepted a deposit for the sale.
Hymie was disheartened by the refusal of his long-time friend and neighbor, and he reached out to other community members to intervene on his behalf. As a result, Charles had a change of heart and verbally agreed to sell his property to Hymie with a mortgage contingency. Charles contacted Ralph and notified him of the latest developments and unilaterally sent him back his deposit.
At first, Ralph refused to hear any of the details of the story and was prepared to enforce his contract. Hymie got involved then, contacting Ralph and claiming that as a next-door neighbor he had a right of first refusal of the property. He further insisted that by Torah law Ralph was required to walk away from the deal. At this point, Ralph did not want the argument to escalate and suggested the matter be resolved in Bet Din. The three signed on for the customary binding of arbitration and presented their cases to our Bet Din.
Who is entitled to purchase the property, Hymie or Ralph? How should the Bet Din rule and why?
Torah Law
According to the ruling of the Shulhan Aruch, a next-door neighbor maintains the right of first refusal in the event the adjoining property to his home is up for sale. The rationale for this ruling is based on a verse in the Torah that requires one at times to go beyond the letter of the law for the sake of his brother. Since a next-door neighbor stands to gain significantly from purchasing the adjoining property, it is incumbent on an outside buyer to allow the neighbor the right of first refusal. In the event the outside buyer purchases the property without legal confirmation from the neighbor, a Bet Din will elect to evict him from the property, and allow the neighbor to make the acquisition.
The above ruling is subject to numerous provisions and restrictions and a competent halachic authority must be consulted before awarding a neighbor the right to purchase the adjoining property to his home. In instances in which the seller is posed with a disadvantage if he sells to the neighbor and not the outside buyer the law of “right of first refusal” is not applicable. Numerous scenarios are discussed by the great Sages of the Talmud that illustrate common disadvantages, including a neighbor who is willing to match the purchase price of an outside buyer, but requests a mortgage contingency. Since the outside buyer is ready to close immediately the neighbor is denied the right to purchase. Albeit, if the seller is willing to wait for his neighbor to come up with the funds needed, the outside buyer is required to step away from the deal in the meantime.
Leading halachic authorities debate whether the above ruling is applicable in instances in which at first the seller denied the neighbor on account of his mortgage contingency request, only to later change his mind in favor. Early halachic sources rule that once the seller legally commits to an outside buyer willing to close immediately, he may no longer reverse his decision and sell the property to his neighbor. Since the outside buyer established a legal holding on the property, he is entitled to complete his purchase without moral concern for the neighbor. Although another reputable halachic opinion rules to the contrary, this latter opinion is nevertheless overruled.
As aforementioned, an outside buyer is removed from the property if he halachically violated the rights of the adjoining neighbor. Nevertheless, in instances in which there is a halachic debate whether a neighbor is presently entitled to evict the outside buyer, the neighbor is rejected. Since the outside buyer is already in possession of the property, the neighbor may not claim rights of ownership in case of a halachic debate of the Sages. Rather the outside buyer in possession of the property can keep his purchase relying on the opinion that supports his position.
Endnotes: Baba Metziah 108b, Shulhan Aruch Hoshen Mishpat 175, Sema 175:7, Teshuvat HaRashba 2:85, Pithei Teshuva 175:11, Divrei Shalom H.M. 8, pg.13, Shulhan Aruch Hoshen Mishpat 175:45.
VERDICT: Too Late
Our Bet Din ruled in favor of Ralph and denied Hymie the neighbor the right to purchase Charles’s home. As mentioned in Torah law, Ralph purchased the home only after Charles legally rejected Hymie because he was unable to close immediately. Since Charles was not required to wait for Hymie to get an approval for a mortgage, and furthermore there was no guarantee the bank would extend him a loan, the law of “right of first refusal” is not applicable. Hence, although Charles later changed his mind, it was simply too late. Once Hymie lost the legal right to purchase, it cannot be reinstated. Hence, Charles is required to accept the return of the deposit and close the sale of his property with Ralph. As mentioned in Torah law, leading halachic authorities rule that although Charles is now willing to sell the property to Hymie his neighbor, at this point, Ralph has no further moral obligation to Hymie and is entitled to his acquisition.
In Loving Memory of Vera Bat Carol, A”H
YOU BE THE JUDGE
The Rightful Heir
Jack wrote a handwritten last will and testament back in 2007. Upon his passing in 2019, the will was found with Jack’s papers in his safety deposit box. The will was not prepared by a lawyer nor was it notarized or signed by witnesses. Jack simply affixed his signature to the bottom of a briefly written statement. In the will, Jack offered to gift his private home to the child that provides full-time room and board his son Joey, a special child. In 2007 when Jack wrote the will his only daughter was not yet married. In 2019, prior to Jack’s passing, his daughter, then married, took Joey into her home for nearly six months before sending him off to a facility that provides for all of Joey’s needs. Jack’s daughter and son-in-law presented the handwritten document to our Bet Din claiming that their father legally gifted them his home since they provided room and board for Joey. Jack’s two sons acknowledged that they were aware of the document their father wrote before their sister provided room and board for their brother Joey, but they were nevertheless unwilling to transfer the property over to their sister. The two brothers defended that it was not their father’s intent to gift his daughter the home for a mere six months of room and board. They explained that back in 2007 the circumstances were different and there was a real concern for Joey’s welfare.
Who should inherit the father’s home? How should the Bet Din rule and why?