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Subject : When is the Lessee Permitted to Take "Key Money"

Fatwa Number : 2701

Date : 26-09-2012

Classified : Leasing

Fatwa Type : Search Fatawaa

Question :

Is the lessee permitted to take the so called (Key Money)?

The Answer :


All perfect praise be to Allah, The Lord of The Worlds, and may His peace and blessings be upon our Prophet Muhammad and upon all of his family and companions.

If you (Questioner) was ascertain regarding the usufruct out of the rented store based on a valid tenancy's contract or under the common applicable law that regulates tenancy agreements, then you are permitted to take the compensation in return of waiving your absolute usufruct .i.e. The bottom line in this case that you are selling your due benefit and there is no harm in selling the benefits even if a profit was gained in return.

However, if the you didn't enjoy the usufruct in case of tenancy's expiration or didn't acquire the right of jurisdiction by the above law, then you aren't permitted to demand a compensation (Key Money); rather, you are obliged to evacuate the store and to reinstate the usufruct to the landlord, since a Muslim isn't permitted to take a compensation in return of something he doesn't possess or own.

In this regard, it is stipulated by the International Islamic Fiqh Academy (IIFA) in resolution no. (31, 6/4) what follows:" If, during the lease period, the first lessee and the new lessee agree that the former shall evacuate the premises for the remaining period of his lease contract, against payment of an amount above the periodic rental, key money is permitted by Shariah, provided the terms of the contract concluded between the owner and the first lessee are strictly observed and the laws in force are fully compliant with Shariah.

However, if the lease expires and the contract is not renewed, either explicitly or implicitly, by virtue of an automatic renewal clause, key money is not allowed, for the simple reason that the owner is entitled more than anyone else recover his property once the lease contract expires." Indeed, Allah is All Knowing.




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