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Murabaha transaction – Can the creditor take over the collecting of the rentals until the debt is repaid?

Answered as per Hanafi Fiqh by Askimam.org

In a Murabaha transaction relating to the sale of fixed property (land and bulindings) is it permissible whithin the shariah: –

 1. include “a session of rental clause” in favor of the creditor in the event of the debtor defaulting in the payment of the instalments to the creditor. Can the creditor take over the collecting of the rentals until the debt is repaid? 

2. for the creditor to deduct collection commision, legal and admin costs from the rental income and credit the debtor with the nett amount towards installments?

Answer

In a murabaha transaction, the purchaser becomes the sole and independent owner of the property. The purchaser is now entitled to rentals received for the property purchased.

Should the purchaser wish to appoint the bank (creditor) as an agent to collect the rental, this would be allowed. They may then agree to offset this against the debt owing on the property. However, the purchaser may withdraw this appointment (of agency) at anytime the purchaser wishes.

1. A ‘session of rental’ clause would not be acceptable as it would preclude the purchaser from his right to collect rentals directly, and deny him his right of withdrawing from the cession.

2. Please explain the terms “commission, legal and admin cost” in the question. Who is charging a commission? What is charged for? What is the legal and admin cost charged for?

And Allah Ta’ala knows best.

Was Salaam

E. Vawda
for Daarul Iftaa

Checked and Approved: Mufti Ebrahim Desai

Original Source Link

This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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