Shabbat Parashat Bo| 5766
Backing Out of a Land Deal After Down Payment Was Made - Based on Piskei Din Rabbaniim - vol. V, pp. 120-123
Case: The plaintiff (=pl) arrived at an agreement over terms to buy property with the owners’ (who were joint inheritors) authorized agent and paid him a down payment. The defendant (=def), one of the sisters, stalled in signing the contract, and in the meantime pl spent money on renovation plans. Finally, def cancelled the sale, with the claim that one of the inheritors decided to buy the property from the others. Pl wants to uphold the sale for which he made the down payment.
Ruling: Generally, the halacha is that money is a kinyan for (finalizes) the purchase of land (Shulchan Aruch, Choshen Mishpat 190:1). However, in our times, this is not the case. The gemara (Kiddushin 26a) says that in a place that the practice is not to sell land without a document, money alone does not finalize the sale. In our time and place, not only is a regular document standard, but no transaction is considered final until there has been a transfer of ownership in the Tabu (Land Registry). In this case, def didn’t even sign a contract, and certainly a change of registry was not done in the Tabu, so the sale is not final.
Even in cases where money does not finalize a sale, there are times when it creates a situation wherein if one backs out of the agreement, he has to accept upon himself a mi shepara, a type of semi-curse for those who do not keep their word. The Beit Yosef brings several opinions on whether a mi shapara was instituted only in regard to the sale of movable objects, where money never works as a kinyan, or whether it applies to other cases where money was paid regarding an agreement where it didn’t effect a kinyan for another reason. The more accepted opinion is that a mi shepara applies broadly (see Shut R. Akiva Eiger 134). At first glance, in our case the down payment should create a mi shepara, even though there was no transfer in the Tabu.
In truth, though, there is no mi shepara here, because the agent who took the money lacked sufficient authority for two reasons. The agent had authority to work out a deal but required final approval by def, who in turn made her approval contingent on the agreement of all of the inheritors. Although there were indications that this was forthcoming, these conditions never materialized. In such a case, there is no mi shepara (Shoel U’meishiv II, IV, 110). Furthermore, it appears that def never authorized the agent to accept a down payment, and thus there is no mi shepara (Shulchan Aruch CM 182:7). In this case, even def had only limited authority, as her authority was conditional on the other inheritor’s acquiescence. Although it is regrettable that pl lost money on building plans because of his understandable expectations, def is not monetarily liable.
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