Backing Out of Purchase Due to Changing Neighbors

(based on Chelkat Yaakov, Choshen Mishpat 13)


Case: Reuven (in the US) agreed to purchase from Yaakov a quarter share in a property in Northern Israel, in which Shimon, Levi, and Yehuda already had such shares. Reuven paid and signed a contract, but the sale was not recorded in the land registry. Sometime later, Yaakov allowed Shimon to back out of his deal and will replace him with another buyer. Reuven now wants to back out of the deal with two claims: 1. He mentioned at the time of the purchase that he is buying only because he knows the other partners, and he is not willing to expose himself to legal or neighbor issues with strangers. 2. The purchase is not complete without the land registration.

Ruling: It is wrong to claim that there is a clear assumption (umdana)that Reuven would not have purchased had he not believed that Shimon would be one of his neighbors/partners. After all, one can never be sure who his neighbors will end up being. Even if Yaakov had not released Shimon from his purchase, Shimon could have sold his share to whomever and whenever, even if it could be proven that it would damage his neighbor (Netivot Hamishpat 315:3). We must assume that Reuven bought with the realization that there was no guarantee in this regard.

P'ninat Mishpat (702)

Various Rabbis

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323 - Keeping the Donations in the Traditional Place

324 - Backing Out of Purchase Due to Changing Neighbors

325 - Buying Looted Seforim from the Slovakians

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Even if Reuven expressed the importance to him (giluy da’at) of the fact that Shimon was to be his neighbor, this will not nullify the sale. Tosafot (Ketubot 97a) says that a formal condition, not a mere giluy da’at even if it was made at the actual time of the transaction (see Tosafot, Ketubot 74b), is needed when the issue is not usually a "deal-breaker" for people. It is rare for someone to make a purchase dependent on the identity of a single neighbor. The Chacham Tzvi (135) posits that we trust only Chazal to determine which umdanot are reliable, and in our times we can only rely on umdanot that are ironclad.
In a case like this, when the money was already paid, it is even harder to reverse the transaction and demand the money returned. There are also opinions that umdanot to undo sales can only be made for the benefit of the seller, not the buyer (see Pitchei Teshuva, CM 207). The Chatam Sofer (CM 70) says that all should agree that one who buys real estate can be assumed to want the land even under less than ideal circumstances, and most poskim accept his opinion. It is even clearer regarding the prospect of acquiring land in Eretz Yisrael.
Regarding the lack of land registry, the Maharsham (Mishpat Shalom 190) says that if the sales deed is written in a serious manner, it is halachically valid even if it is not legally final and enforceable according to the law of the land. It is possible that there are those who argue [and in a post note, he cites the Aruch Hashulachan as saying that the land registry is necessary]. In any case, the Maharsham appears correct, and, additionally, Reuven would have to undergo the mi sheparaprocess if he wanted to back out. Therefore, we should not allow Reuven to back out. [These days in Israel, most batei din do not recognize a sale as binding until transfer in the Tabu (land registry).]