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Turnover Clause

Answered according to Hanafi Fiqh by Askmufti.co.za

Q: Is a turnover clause permissible in Islam?

A: A turnover clause, in terms of which a percentage of turnover made by tenant is paid over to the landlord, is not permissible.

If the turnover clause is apart from monthly or yearly rental, then it’s non-permissibility is quite apparent, for a landlord is only entitled to rental and nothing else. Everything extra will fall under riba or usury.

If the turnover clause is regarded as rental, then too, it will not be permissible because a condition for leasing in Shariah is that the rental must be known and specified in advance. In this case the exact amount of money to be paid to the landlord will only be known after the nett income of the tenant has been declared.

From both angles, therefore, such a clause will not be permissible

And Allah Ta’ala knows best

Mufti Siraj Desai

This answer was collected from AskMufti.co.za, which is operated under the supervision of Mufti Siraj Desai of Darul-Uloom Abubakr, South Africa.

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