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Offering First Right of Refusal to a Partner or Neighbor

The Shulhan Aruch, in the Hoshen Mishpat section (175:5-7), addresses the question of to whom a property owner must afford priority when selling the property. If the person is only a partial owner in the property and wishes to sell his portion, then Halacha requires that he first offer his share to his partner. Likewise, if he owns the property together with numerous partners, then he must offer his portion to each of them in proportion to their respective shares in the property. Even if the seller is not on good terms with his partner, he may not sell his share to somebody else before offering it to the partner.

If a person enjoys exclusive ownership over a property and wishes to sell it, he must offer first right of refusal to the owners of neighboring or adjoining properties. Once again, even if he has grievances against his neighbor and prefers to sell the property to a friend, Halacha requires that he first offer it to the neighbor.

In such cases, where a person must first offer the property to a partner or neighbor, if he fails to do so and instead sells his property to somebody else, the partner or neighbor can make a claim to Beit Din to have the sale annulled. Since the seller had violated the requirement to afford priority to partners and neighbors, the partner or neighbor can demand the annulment of the sale so that he can purchase the property.

Of course, this law applies only when the partner or neighbor is prepared to pay a fair market price for the property. If the partner or neighbor offers less then the fair market value, then he forfeits his right to first refusal and the owner can sell the property to whomever he likes.

The reason for this Halacha is that partners and neighbors, who already have some connection to the property, stand to benefit from purchasing it more so than anybody else. The Torah demands, "Ve'asita Ha'yashar Ha'tov" – "You shall do that which is upright and good" (Devarim6:18), that we conduct ourselves with basic ethical propriety, and therefore one must grant priority when selling property to a partner or neighbor.

Summary: One who sells his share of a property must first offer it to his partner, assuming the partner is willing to pay the fair market price; if he does not, the partner can demand the sale's annulment. If one has full ownership over a property and wishes to sell it, he must offer first right of refusal to the owner of the neighboring property, assuming he is prepared to pay the fair market value.

See the book- "Pure Money" by Dayan Cohen, pages 172-173.

 


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