August 2017
The effectiveness of the right of first refusal under Article 34-1 of the Land Law only requires another other joint owner to indicate the intent of purchase under the same terms and conditions to the selling joint owner(Taiwan)
Luke Hung
The Supreme Court rendered the 105-Tai-Shang-598 Civil Decision of April 13, 2016 (hereinafter, the "Decision"), holding that the effectiveness of the right of first refusal under Article 34-1 of the Land Law only requires another other joint owner to indicate the intent of purchase under the same terms and conditions to the selling joint owner.
According to the facts underlying this Decision, the Appellee entered into the power of attorney at issue to Individual A, who was not a party to this lawsuit, to appraise and sell the land at issue which was jointly owned by the parties and to handle matters relating to inheritance registration. Individual A subsequently sent a postal demand letter on behalf of the Appellee to the Appellant to inform him of his right of first refusal. The postal demand letter indicated that the land would be sold to a third party for NT$5 million with all relevant costs and expenses assumed by the buyer. However, the NT$1.6 million compensation for handling the inheritance was not mentioned. The Appellant asserted the right of first refusal pursuant to law. However, the original trial court rendered a decision rejecting the Appellant's claim to have the due portion of the land set forth in the attached registration schedule transferred to the Appellant pursuant to the sales contract upon his payment of NT$5 million on the ground that the Appellant did not exercise the right of first refusal legally. Therefore, the Appellant appealed.
According to this Decision, the right of first refusal under Article 34-1 is a right of formation, which becomes effective as long as another joint owner indicates the intent to purchase from the selling joint owner under the same terms and conditions.
It was further pointed out in the Decision that although the postal demand letter issued by Individual A on behalf of the Appellee indicated: "I (meaning the Appellee) will sell off to a third party for a total of NT$5 million with the inheritance tax, land value tax, registration fee, stamp tax, relevant costs and expenses for handling inheritance formalities, brokerage fee, attorney's fee, court escrow fee, land agent fee, etc. assumed by the buyer...," still it was not mentioned that the above price included the NT$1.6 million compensation for handling the inheritance registration. Therefore, since the Appellant replied and indicated his intent to exercise the right of first refusal via a postal demand letter, the right of first refusal should be exercised based on the above terms and conditions. As to whether the Appellee's subsequent issuance of another postal demand letter to indicate that the price should include the NT$1.6 million compensation to Individual A for handling the inheritance matter is acceptable, there is still room for further investigation. Therefore, the original decision was reversed and remanded.
The Supreme Court rendered the 105-Tai-Shang-598 Civil Decision of April 13, 2016 (hereinafter, the "Decision"), holding that the effectiveness of the right of first refusal under Article 34-1 of the Land Law only requires another other joint owner to indicate the intent of purchase under the same terms and conditions to the selling joint owner.
According to the facts underlying this Decision, the Appellee entered into the power of attorney at issue to Individual A, who was not a party to this lawsuit, to appraise and sell the land at issue which was jointly owned by the parties and to handle matters relating to inheritance registration. Individual A subsequently sent a postal demand letter on behalf of the Appellee to the Appellant to inform him of his right of first refusal. The postal demand letter indicated that the land would be sold to a third party for NT$5 million with all relevant costs and expenses assumed by the buyer. However, the NT$1.6 million compensation for handling the inheritance was not mentioned. The Appellant asserted the right of first refusal pursuant to law. However, the original trial court rendered a decision rejecting the Appellant's claim to have the due portion of the land set forth in the attached registration schedule transferred to the Appellant pursuant to the sales contract upon his payment of NT$5 million on the ground that the Appellant did not exercise the right of first refusal legally. Therefore, the Appellant appealed.
According to this Decision, the right of first refusal under Article 34-1 is a right of formation, which becomes effective as long as another joint owner indicates the intent to purchase from the selling joint owner under the same terms and conditions.
It was further pointed out in the Decision that although the postal demand letter issued by Individual A on behalf of the Appellee indicated: "I (meaning the Appellee) will sell off to a third party for a total of NT$5 million with the inheritance tax, land value tax, registration fee, stamp tax, relevant costs and expenses for handling inheritance formalities, brokerage fee, attorney's fee, court escrow fee, land agent fee, etc. assumed by the buyer...," still it was not mentioned that the above price included the NT$1.6 million compensation for handling the inheritance registration. Therefore, since the Appellant replied and indicated his intent to exercise the right of first refusal via a postal demand letter, the right of first refusal should be exercised based on the above terms and conditions. As to whether the Appellee's subsequent issuance of another postal demand letter to indicate that the price should include the NT$1.6 million compensation to Individual A for handling the inheritance matter is acceptable, there is still room for further investigation. Therefore, the original decision was reversed and remanded.
