Kindly answer the folowing questions for transactions that take place in Dubai:-
1. Can we buy off plan and sell before completion
2. What if 50 % of building is complete
3 What if their intention was to hold until completion but subsequently sells before completion
4. Is the purchase of land permissible
5 Even where the land is purchase on a deferred payment basis for example 10% or less
Broker
6. Is it permissible for a broker to sell off plan
7. What if the agent knows that that the person who he is selling to has the intention to flip the property.
8. Can we buy from the secondary purchaser and pay a premium for example Developer sells to A – A sells to B at 10% premium – is this permissible
9. If we establish a company SPV – in which the property is bought and sold prior to completion is selling the company permissible, whose asset is the incomplete property ?
10. What about the profits made to date in any transaction described above which were not permissible ?
11. What if I was advised by another scholar that this was permissible and the profits that were made in the interim – may those profits be retained ?
12. Can we give a bribe to the employees of developer to gain priority to purchase units so that they are made available to us.
13. If buying through an agent who has paid for example 1% bribe and 5% premium – is the payment of 6% to the agent permissible
15. Can I purchase a whole building and sell to individuals on a primary sale basis and pay the developer a premium
16. As a builder, should I allow second transfers to occur?
In the name of Allah, Most Gracious, Most Merciful
Assalaamu `alaykum waRahmatullahi Wabarakatoh
1. Buying property off plan is similar to the Shar‘ī concept of Istisna‘ which is a permissible form of commerce. However, according to the principles of Sharī‘ah, it is not permissible to sell any item forward until the purchaser takes possession of the item.
و الثالث ان لا يقدر البائع على التسليم مثل الصوف على ظهر الغنم و الأولاد في البطون و العبد الآبق و نحو ذلك فالبيع فاسد فيها (النطف في الفتاوى ص 276 , العلمية)
If certain strict conditions are adhered to, it will be permissible for the purchaser to enter into a second parallel Istisna‘ contract with a new purchaser. It will be as if the initial purchaser becomes a figurative developer and sells the property to another purchaser. This demands drawing up a completely separate and independent contract for this transaction. Furthermore, once the construction of the building is complete, the initial purchaser must take possession of it from the developer; thereafter, he can forward it to the second purchaser. It will not be permissible for the initial purchaser to transfer the ownership of the property from his name to the name of the second purchaser as this falls under the rubric of selling that which one does not possess. The first contract of Istisna‘ must terminate between the developer and the initial purchaser through the transfer of ownership from the developer to the initial purchaser. Thereafter, the initial purchaser can forward the property to the new purchaser to complete the second contract of Istisna‘. However, it is not necessary for the initial purchaser to delay entering into the second contract until after he takes possession of the property. He can enter into the second contract before the completion of the project.
2. The same rule will apply as mentioned above.
3. The intention has no bearing or relevance to the permissibility or impermissibility of the transaction. If a parallel Istisna‘ contract is drawn and the conditions are adhered to, it will be permissible. However, if the conditions of parallel Istisna‘ are not adhered to, then this will constitute the sale of an item that one does not possess which is strictly prohibited.
4. It is permissible to purchase land.
5. It is permissible to purchase land on deferred payments as long as the land is transferred into the ownership of the purchaser immediately and not delayed.
عن ابن عمر، عن النّبيّ صلى الله عليه وسلم. ولفظ البزَّار ـ قال: «نهى رسول الله صلى الله عليه وسلم عن بيع الغرر، وعن بيع الكالىء بالكالىء، وعن بيع عاجلٍ بآجلٍ». فالغرر: أن تبيع ما ليس عندك. والكالىء بالكالىء: دينٌ بدينٍ (فتح باب العناية ج 2 ص 381 ,دار الارقم)
6. It is permissible for a broker to sell property off plan as the agent (Wakeel) of the developer.
7. If the agent knows or presumes that the purchaser will flip the property, it will still be permissible to sell him the property since there are certain permissible avenues as previously mentioned.
8. Purchaser A can enter into an Istisna‘ contract with B and both parties are at liberty to stipulate whatever price they wish; thus, A can stipulate the price to be his initial cost price plus 10% markup.
9. It will not be permissible to initiate such a company that sells property before taking possession and neither will the sale of such a company be permissible since its assets cannot be transferred until possession of the property is taken. However, it will be permissible to initiate a company that enters into parallel Istisna‘ contracts with other purchasers. Nevertheless, the company cannot be sold with incomplete projects as its assets. The sale of the company signifies the sale of its assets; thus, selling the company will be similar to selling the properties before taking possession which is prohibited.
10. The profits of any items that were sold which were not in the possession of the seller or sold other than through parallel Istisna‘ will not be permissible. All transactions conducted in this manner should be annulled and countermanded; the money should be returned to the purchaser and the property to the seller. If they wish, they can enter into a new transaction thereafter. If this is not possible, the profits must be given to the poor and needy without having the intention of reward.
والحاصل أنه إذا باع إنسان ما سيملكه فيما بعد كالحنطة أو السفينة التي سيصنعها أو الجلود فالبيع باطل أما إذا وقع البيع على سبيل السلم أو الاستصناع وروعيت شرائطهما فالبيع صحيح (درر الحكام شرح مجلة الاحكام ج 1 ص 156 , العلمية)
11. If the property was sold before the seller took possession of the property and he did not enter into an Istisna‘contract with the second purchaser, the profits cannot be retained as they are impermissible despite the view of any scholar.
12. It is not permissible to give bribes to gain any priority or advantage in purchasing units.
13. If a person knows that the agent pays bribes to facilitate his deals, it will not be permissible to purchase the units from him especially if such a person gives him an itemization breaking down the bribe rate and the profit rate as that will be assisting him in sin. However, if one does not know about the bribe and the agent informs him that his fees total 6%, it will be permissible to purchase the property through him and he will bear the burden of the sin individually.
14. It will be permissible to purchase a whole building from the developer. However, it will not be permissible to sell individual units in the building to others until you either take possession of the fully developed building or you enter into separate individual Istisna‘contracts with the new purchasers. In regards to your query of paying the developer a premium, kindly elucidate. We do not fully understand your question.
15. If it is within your authority to prevent second transfers, you should attempt to prevent it. This can be achieved through placing certain conditions in the initial contract of sale inhibiting the transfer of ownership to a third party prior to delivery of the item to the first purchaser. You can also encourage the people to avoid the impermissible second transfer by implementing the somewhat similar yet permissible stratagem of parallel Istisna‘ as mentioned above.
And Allah knows best
Wassalam
Ml. Yusuf bin Yaqub,
Student Darul Iftaa
Checked and Approved by:
Mufti Ebrahim Desai
Darul Iftaa, Madrassah In’aamiyyah