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Subject : Legal Remarks on Ijarah-Contracts End with Ownership

Fatwa Number : 2816

Date : 30-07-2013

Classified : Current Financial Issues

Fatwa Type : Search Fatawaa

Question :

Please tell me about the Religious ruling on rent contract which ends with ownership.

The Answer :

Praise be to Allah, prayer and peace be upon the Messenger of Allah.

After studying and searching the details of the contract, we discovered the following religious notes:

First: Article (5/b) states that "The rent must be paid when due …. Then, all payments will be due at once, and must be paid together with delay fines.” These delay fines are forbidden usury [Riba]. Delay fines are also mentioned in article (5/d).

Second: Article 8 states ,"The second party is committed to buy insurance for the item rented.” This is contrary to the original ruling that expenses relating to the item in question are the responsibility of the original owner not the tenant, and the insurance must be takafuli (cooperative) not any commercial insurance.

Third: Article 13 defines the cases which “Terminate the contract” and one of these situations is: - “If the lease holder failed to do the needed maintenance and repair work.”

This item must be limited to maintenance of operational damages—not maintenance of the original item because the lease holder should not be responsible for maintaining the origin of the item in question. Therefore this contract is religiously void until it is corrected. And Allah knows best.



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