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Fatwa CenterCondition of the Istisnaa'a contract
Question
Question : Assalamu Alaicom. I have bought a low-cost house & lot payable for 8 years on a monthly installment basis, the design and sized has been determined,but this house will be constructed 1 year before completing the payment (which means 7 years has been paid), however, the construction will be extended equal to the total of the months I may fail to pay. The monthly payment is used by the seller for business unknown to me, only having a contract on my hand and the trust that whatever we've agreed on the contract will be fulfilled in time is my only guarantee. Please advise whether this dealings is permissible or not.. Jazakallah. Wassalam..
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.
What we understood from this transaction is that it is a contract of Istisnaa'a (i.e. making on customer’s order). The contractor will build you a house according to certain specifications in a specific time in return for a price to be paid over a limited period, and that you have agreed on a penalty clause that entitles the contractor to delay finishing the construction according to the delay in paying installments; and there is nothing wrong with that. The statement of the Islamic Fiqh Council, in its seventh conference in Jeddah, stated the permissibility of the contract of Istisnaa'a if it meets two conditions:
Firstly, clear statement of the type, amount and required features of the work to be done or product to be made.
Secondly, specification of the time frame involved.
Furthermore, it stated that it is permissible for the contract of Istisnaa'a to delay paying the full price, or it may be paid in installments at specific dates over a limited period. It is also permissible for the contract of Istisnaa'a to include a penalty clause regarding what the two parties have agreed on, except in case of circumstances beyond the control of the two parties.
Accordingly, if the transaction between you is like that, then there is nothing wrong with it. There is also nothing wrong if he (the seller) benefited from the money before finishing the house for he actually owns the money by virtue of the contract.
Allaah Knows best.
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