Who Pays for an Unexpected Tax? – part II | Beit Din Eretz Hemda - Gazit | Beit Midrash

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P'ninat Mishpat

קטגוריה משנית

Case: The plaintiff (=pl) and the defendant (=def) were interested in selling pl’s house to def, but the sale could not be completed because def was not yet a member of the yishuv in which the property is found. Def moved into the house under a rental agreement, which was replaced by a sales contract months later, when the yishuv approved def. After the second contract was signed, it became known that a recent change in urban planning rules made it possible to add three rather than two housing units to the house. This fact added significantly to the mas hashbacha (betterment tax at the time of sale), which pl lowered by negotiation to 72,672 NIS. Pl argues that for all practical purposes, the sale took place before the tax was levied, and it is unfair that this tax, which was levied due to a technicality caused by def, should fall on pl when only def will benefit from the regulation change. Def responds that since the original arrangement was indeed a rental, the tax falls on pl, and, in any case, there is no reason for one who is not selling to pay a sales tax. Def adds that he does not plan to build the extra unit and might not have bought the house if he would have had to reimburse pl this extra amount.

Ruling: [Last time we saw that the first agreement was a rental, not a sale. We started considering pl’s claim of mekach ta’ut (transaction based on misinformation) since pl did not know about the tax.]

P'ninat Mishpat (744)

Beit Din Eretz Hemda - Gazit

765 - Who Pays for an Unexpected Tax? – part I

766 - Who Pays for an Unexpected Tax? – part II

767 - Not Completed and Imperfect Renovation Job – part II

When something quantitative is missing in a sales item, so that even real estate sales can be nullified, some Rishonim say that if the seller can provide that which is missing, this is done; if he cannot provide it, the sale is void. Others say that even when it cannot be provided, the sale stands, and the price difference is returned.

Is lack of knowledge about building rights/taxes comparable to something missing/wrong with a property? Contemporary Acharonim dispute this matter. Rav Yehuda Silman (Hayashar V’hatov X, pp. 85-93) compares a case similar to ours to a blemish in a property. In both cases, the buyer can opt out of the sale. Along these lines, the Maharsham (III:181) says that if the seller did not know about a significant tax, he can nullify the sale. Rav Levin (Yerushalayim Rulings XI, p. 310) brings a machloket whether changes in rights are grounds for nullifying a sale, but concludes that if it was known that building rights were a possibility, not being aware of the tax considerations does not nullify the sale. Rav Nussbaum (Mekabtz’el XXX, p. 375), discussing a case where the buyer has to inform the seller of rights that the seller does not know about, opined that the lack of knowledge would not nullify the sale but the buyer would violate the prohibition of benefitting from mispricing and would be obligated to return the difference.

In our case, the first two opinions would say that pl can nullify the sale, and the third would say that he would be obligated to return the extra value of the property. In this case, pl is asking for less than that, allowing def to enjoy the new rights and asking only to reimburse for the fraction of that difference, to reimburse for the added tax, and he should be able to do so.

We will bring the final considerations next time.

P'ninat Mishpat