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Fatwa CenterA forbidden form of rental/leasing contract
Question
AOA Sheikh,
I want to ask you about ruling on rental/leasing contract. If in the rental/leasing contract, it is clearly mentioned that the past payments will be refunded except rental in case buyer can not pay further payments. Is this kind of contract permissible.
For example. A buyer buys a house through a leasing company at an agreed price of USD 144000 which would be paid in a period of 3 years at a monthly rate of USD 4000 (rent USD 1500, purchasing price USD 2500). Due to some reason the buyer can not pay after 2 years. According to the contract the leasing company will refund him 2 years of purchasing price i.e. USD 60000 while keeping rents which amount to USD 36000.Is this contract permissible according to Sharia?
Allah Hafiz,
Shirjeel Humayun
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.
The rental/leasing contract takes many forms, some of which are permissible and others are forbidden. The criterion for permissibility (of this contract) is to have two separate contracts, each independent from the other in time, i.e. to sign the sale contract after the rental contract, or to have a promise of ownership at the end of the duration of rental. For further information, see Fatwa 92515.
As for the contract you asked about, it is impermissible under Sharee‘ah, due to the lack of the independence between the rental contract and the sale contract. So, rental here conceals sale, the evidence is that the rent value is not the actual rental fee, i.e. it is not a fair equivalent rent.
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