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Assalaamu ‘Alaikum Warahmatullahi Wabarakaatu

Respected Mufti Saab

My farther in law has given a property to his 3 children. They wish to develop the property. They do not have the finance to develop it and have resorted to obtaining an interest bearing loan. It is my father in laws desire that this investment be for his 3 children.

We have advised that we cannot be part to the interest transaction and loan.

They cannot pay us out for the property share as they do not have any funds and the building is to be financed by the bank.

They have come back with 2 options:

  • We have no part in the company, and they donate/gift an amount to their sister each month. (it stands to reason that they will look at the amount of rental profits is made and give her an amount equal to her share)
  • The second option is that they rent out the land from their sister.  And when the building is free hold they will give her as a present.  Initially She will own her share of the land and nothing of the building.

 

My suggestion was a further option… they can put up the building amongst themselves only. Once its up they can fix a selling price to us. We then agree to have this payable to them at a fixed payment plan over 10 years.  The building process and the bond will be their responsibility, and once we enter into a purchase agreement with them,  we will immediately be entitled to her full share of the rental profits.

Would any of the above options work out sharia wise, or can we amend them to be something sharia would allow? Please advise further.

The project is quite substantial, at 25million.  While that should not sway the sharia decision, its also not something to just leave out. So it would be of great appreciation if you could advise /or structure a proposal for the wife’s share as the remaining parties see no issue with going along with a bond.

Jazakallah

Shuaib

Answer:

At the outset, it is important for your in laws to bear in mind that insisting on an interest bearing loan despite knowing its prohibition and fatal consequences is a sign of disregard to the laws of Allah Ta’ala and weakness of Iman. It is our obligation to put Allah Ta’ala and His commands before our financial gain no matter how lucrative and attractive the haram may appear.

We commend you and your wife’s intention to desist from this temptation and honour the law of Allah Ta’ala.

In keeping with the wishes of your father in law for all his children to benefit from this land the following options may be considered:

  1. Your wife may lease out her share of the land to the other shareholders. Thus, she will have no share in the building at all and only collect rental on her shareholding of the land only.

 

  1. Further to the above option, she may then purchase her share back from the developers and payment arrangements could be made at that stage. However, the developers will not be obliged to do so.

 

  1. If the wife can seek an interest free loan to pay for her share of the development, then she can be part of the development without being party to the interest bearing loan.

 

And Allah Ta’ala Knows Best