In light of our earlier story here regarding the Twin Rivers Yeshiva, we present this brief halachic discussion by Rabbi Yehonoson Dovid Hool:
Question: Our shul is looking to expand its premises, and we noticed recently that the house next door to the shul has been put on the market for sale. The house is being sold by a bank as a result of a foreclosure and as such it is being offered at a very favorable price for this neighborhood. However, before we managed to tender an offer to buy the house, we heard that the bank is already negotiating with another potential buyer. Is it permitted and ethical for us to approach the bank and offer a competing bid to purchase the property before the other party closes the deal?
The Halachah (Shulchan Aruch, Choshen Mishpat 237) forbids one to interfere with the business deals of another person.
Once a buyer and a seller have reached an agreement, another person may not interfere with the deal by offering a competing bid. One who does so is labelled by the Talmud (Kiddushin 59a) as a “Rasha” – a wicked person, and although a Beth Din cannot cancel the purchase if this person succeeds in buying it, the Beth Din is permitted to publicize this person’s actions as being immoral (Sm”a, notes on Shulchan Aruch 237:2).
There are, however, a number of limitations to this prohibition.
Firstly, it applies only if the buyer and seller have reached an agreement about the sale, including the price, and are at the stage of preparing to finalize the actual purchase. If the parties are merely at the earlier stage of negotiations, others are free to make a competing bid.
Furthermore, this prohibition was enacted to protect the first buyer from losing his deal, but it was not intended to work to the detriment of the seller, and so if the seller himself wishes to solicit offers from other parties then others may make their bids for the deal.
There are several other issues involved in our case above that might mitigate this prohibition further.
Firstly, there is an opinion in Halachah (Tosefos, Kiddushin 59a, Remo”h 237:1) that the prohibition of interfering with another’s business deal does not apply in the case of an exceptional opportunity. The competing party is considered as wicked because he could equally find a similar deal elsewhere, and therefore it is immoral to snatch this particular deal from someone else, but if a deal like this could not be found elsewhere, one would be permitted to compete. The example discussed in the Poskim is where there is a metzia, an ownerless object available for whoever gets there first. Even if one person is approaching it with intention to take it into his possession, another person may attempt to pre-empt him, because it is unlikely that he will be able to avail himself of a similar opportunity elsewhere.
Extrapolating this line of reasoning, some Poskim (ibid) maintain that in the case of a sale, too, if the price is being offered for an exceptionally cheap price, the prohibition of making a competing bid in the closing stages of another’s deal does not apply.
Furthermore, there is a minority opinion (see Aruch Hashulchan 237) that allows one to compete even in the closing stages of another’s negotiations, if the purchase involves a mitzvah. So if one is about to purchase an esrog, for example, someone else may put in a competing bid at the last minute. Even those who disagree with this leniency and do not allow such interference even in the case of a mitzvah may nonetheless agree in our particular case. They discuss a case such as buying an esrog, in which although the second buyer requires the purchase for a mitzvah, the first buyer also wishes to perform the mitzvah. Responsa Ginzei Yosef (Ch. 132) rules that if only the second party is purchasing for a mitzvah and the first buyer is not, then it would be permitted for the second party to offer his bid.
There is another mitigating factor in our case, and that is the fact that the property being offered for sale is right next door to the shul.
The Halachah of Bar Metzra (Shulchan Aruch, Choshen Mishpat 175) grants a next-door neighbor first rights to a property that is put up for sale. This rule is so imperative that even if another party has completed a deal and bought a property, he must vacate the property and sell it on to the next door neighbor if this neighbor wishes to purchase it. However, there are many restrictions to this rule (the neighbor must express his desire to buy immediately upon hearing about the sale, for example, and must have the identical financial resources available as the buyer, so that the seller will not be placed at a disadvantage), so much so that this law is to most intents and purposes inapplicable nowadays. Nonetheless, even if the law of Bar Metzra does not apply for some reason, the neighbor does retain the advantage that the prohibition of interfering with an almost-concluded deal does not apply to him.
In the light of the above, it would appear than in our circumstance the members of the shul would be permitted to approach the bank to make a competing offer to purchase the house on behalf of the shul.
Rabbi Yehonoson Dovid Hool is a member of the Kollel Choshen Mishpat – Institute for Dayanim, Jerusalem, Israel, and its affiliated Beis Din, “Nesivos Chaim.”