Fatwa: # 43035
Category:
Country:
Date: 7th September 2019

Title

Real estate Buy back scheme

Question

Party 1 is building a plaza and selling a shop to party 2 for $100,000. The plaza will be ready in 2.5 years. Party 2 will pay full payment of the shop now. Party 2 has the option to sell the shop back to Party 1 after 2 years and before 2.5 years at $115,000.1. Is this deal permissible under sharia?2. What sort of documentation is mandatory to be sharia compliant3. From where can I get sample sharia compliant sample documentation for such deal.
Aamir

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Brother Aamir,

The sale you are referring to is known as an Assured buy back scheme, often called an exit guarantee or an assured appreciation. In this scheme, the developer (builder-seller) gives investors the opportunity to sell the property back to him for an increased price at an agreed later date. This gives the investor a sense of reassurance that his investment will bring him more profit. The assured buy back is a part of the sale contract, and so there is a legal obligation for this guarantee to remain in place. This scheme is often offered on off-plan properties and often properties abroad.[i]

In principle, in an ordinary sale, the commodity must be in existence. If the commodity does not exist, the sale of the item will not be permissible. However, there is an exception to this, which is known as Istisna’ in Shariah.

You refer to the sale of a shop in the plaza which is not built as yet. The sale of a non-existent shop is impermissible. However, the referred transaction falls under Istisna’. This is a kind of sale where a commodity is transacted before it comes into existence.

In your referred case, Party 2 is hiring Party 1 to build a shop for him, and the builder’s plan or the developer’s blueprint is the only indication of what the property will look like on completion. This is different from the general sale where the commodity must be in existence for the transaction to be valid. In this case, it is not necessary that the full payment is paid in advance, it may be deferred to any time according to the agreement of both the parties. Once the building is complete, it will belong to the person that paid for it.[ii]

However, as the Istisna’ deal in reference will include an assured buy back scheme, there are a few things that you should be aware of before finalising the sale:

  • Selling back the shop to Party 1(builder-seller) without taking the shop into possession will be impermissible.[iii]
  • There should be no condition stipulated in the contract that enforces either the builder to buy back the shop or the customer to sell it back to the builder without having the liberty to sell it to a 3rd party. [iv]
  • If due to any reason after two years, the construction does not start, then selling back the non-existent shop to Party 1 will not be permissible.[v] [vi]
  • The two different sales cannot be under a single contract.[vii]
  • In addition to all of the above, all means that could lead to a dispute in future should be avoided.

In Shariah, having two different transactions in one single contract is impermissible, because it is a well settled rule in the Islamic legal system that one transaction cannot be made a pre-condition for another. Therefore, the correct way of proceeding with the deal is to have a one-sided promise of repurchase of the shop from the builder after 2 years. This way the sale will not be held to be contingent or conditional with the fulfilment of the promise made. A well-executed promissory note has the full effect of law behind it and is legally binding. This will legally bind Party 1 to buy back the shop from Party 2 and thus, protect his interests.[viii] [ix]

 

And Allah Ta’āla Knows Best

Naved Akhtar Ibn Shabbir.

Student - Darul Iftaa

Shillong, India. 

Checked and Approved by,

Mufti Ebrahim Desai.

 

 

 


[ii] Fatawa Qasmiya: Vol 19, Pg: 656 (Ashrafi book depo, Deoband)

[iii] درر الحكام شرح مجلة الأحكام - العلمية (1/ 201)

لِلْمُشْتَرِي أَنْ يَبِيعَ الْمَبِيعَ لِآخَرَ قَبْلَ قَبْضِهِ إنْ كَانَ عَقَارًا وَإِلَّا فَلَا وَكَذَلِكَ يَجُوزُ لَهُ أَنْ يَهَبَهُ

 

وَقَوْلُ الْمَجَلَّةِ ( لِآخَرَ ) مَعْنَاهُ لِغَيْرِ الْبَائِعِ لِأَنَّهُ لَا يَجُوزُ لِلْمُشْتَرِي أَنْ يَبِيعَ الْعَقَارَ مِنْ بَائِعِهِ قَبْلَ الْقَبْضِ وَإِذَا فَعَلَ فَالْبَيْعُ فَاسِدٌ كَمَا فِي بَيْعِ الْمَنْقُولِ كَمَا لَا يَجُوزُ لَهُ أَنْ يَهَبَهُ أَوْ يَرْهَنَهُ بَائِعُهُ فَإِذَا وَهَبَهُ مِنْهُ وَقَبِلَ الْبَائِعُ كَانَ إقَالَةً ( اُنْظُرْ الْمَادَّةَ 119 ) وَكَذَلِكَ لَيْسَ لِلْمُشْتَرِي أَنْ يُؤَجِّرَ الْمَبِيعَ مِنْ بَائِعِهِ قَبْلَ الْقَبْضِ فَإِنْ أَجَّرَهُ لَمْ تَلْزَمْهُ الْأُجْرَةُ ( اُنْظُرْ شَرْحَ الْمَادَّةِ 85 وَالْمَادَّةَ 275 )

 

[iv]

الاختيار لتعليل المختار (2/ 25) 

الْجُمْلَةُ فِي ذَلِكَ أَنَّ الْبَيْعَ بِالشَّرْطِ ثَلَاثَةُ أَنْوَاعٍ: نَوْعٌ: الْبَيْعُ وَالشَّرْطُ جَائِزَانِ، وَهُوَ كُلُّ شَرْطٍ يَقْتَضِيهِ الْعَقْدُ وَيُلَائِمُهُ كَمَا إِذَا اشْتَرَى جَارِيَةً عَلَى أَنْ يَسْتَخْدِمَهَا، أَوْ طَعَامًا عَلَى أَنْ يَأْكُلَهُ أَوْ دَابَّةً عَلَى أَنْ يَرْكَبَهَا؛ وَلَوِ اشْتَرَى أَمَةً عَلَى أَنْ يَطَأَهَا فَهُوَ فَاسِدٌ لِأَنَّ فِيهِ نَفْعًا لِلْبَائِعِ لِأَنَّهُ يَمْتَنِعُ بِهِ الرَّدُّ بِالْعَيْبِ، وَقَالَا: لَا يَفْسَدُ لِأَنَّهُ شَرْطٌ يَقْتَضِيهِ الْعَقْدُ، وَجَوَابُهُ مَا قُلْنَا.

وَنَوْعٌ كِلَاهُمَا فَاسِدَانِ، وَهُوَ كُلُّ شَرْطٍ لَا يَقْتَضِيهِ الْعَقْدُ وَلَا يُلَائِمُهُ، وَفِيهِ مَنْفَعَةٌ لِأَحَدِ الْمُتَعَاقِدَيْنِ

 

[v] درر الحكام شرح مجلة الأحكام - العلمية (1/ 100)

الْمَالُ هُوَ مَا يَمِيلُ إلَيْهِ طَبْعُ الْإِنْسَانِ وَيُمْكِنُ ادِّخَارُهُ إلَى وَقْتِ الْحَاجَةِ مَنْقُولًا كَانَ أَوْ غَيْرَ مَنْقُول

 

درر الحكام شرح مجلة الأحكام - العلمية (1/ 152) 

وَلَمَّا كَانَ الْمَعْدُومُ لَا يُمْكِنُ إحْرَازُهُ وَلَا ادِّخَارُهُ فَلَيْسَ بِمَالٍ وَالْبَيْعُ بِمَا لَيْسَ بِمَالٍ بَاطِلٌ فَبَيْعُ الْمَعْدُومِ بَاطِلٌ

 

[vi] العناية شرح الهداية (7/ 114)

يَجُوزُ اسْتِحْسَانًا وَالْقِيَاسُ يَقْتَضِي عَدَمَ جَوَازِهِ؛ لِأَنَّهُ بَيْعُ الْمَعْدُومِ، وَقَدْ نَهَى - صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ - عَنْ بَيْعِ مَا لَيْسَ عِنْدَ الْإِنْسَانِ وَرَخَّصَ فِي السَّلَمِ، وَهَذَا لَيْسَ بِسَلَمٍ؛ لِأَنَّهُ لَمْ يُضْرَبْ لَهُ أَجَلٌ، إلَيْهِ أَشَارَ قَوْلُهُ: بِغَيْرِ أَجَلٍ.

وَجْهُ الِاسْتِحْسَانِ الْإِجْمَاعُ الثَّابِتُ بِالتَّعَامُلِ، فَإِنَّ النَّاسَ فِي سَائِرِ الْأَعْصَارِ تَعَارَفُوا الِاسْتِصْنَاعَ فِيمَا فِيهِ تَعَامُلٌ مِنْ غَيْرِ نَكِيرٍ، وَالْقِيَاسُ يُتْرَكُ بِمِثْلِهِ

(و قوله) و لأنه يجوز فيما فيه تعامل لا فيما لا تعامل فيه.

 

[vii] مسند أحمد ط الرسالة (6/ 324)

نَهَى رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ عَنْ صَفْقَتَيْنِ فِي صَفْقَةٍ وَاحِدَةٍ"

[viii] An introduction to Islamic Finance, pg 87-89 (Maktaba Ma’ariful Quran, Karachi).

 

 

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