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Rufai Oladimeji
, Nigeria.
Question

I live in Canada, and there is a Muslim
Housing program that is available to help
Muslims purchase homes or businesses. The
way this works is based on partnership,
where I put 30% of the price of the house I
choose, then the corporation puts the
remaining 70%. The corporation "rents" its
share over a period of time at a yearly rate
of 7% of the price of the house. My goal is
to buy back their share with monthly or
yearly installments (which is set at my
convenience at the beginning of the
contract). I can do so in any way I want, and
while doing so, my rent payments decrease
because they are based on the corporation's
share. The sooner I buy back their share,
the sooner I will own the house, all while
paying taxes, insurance, and maintenance.
First of all, is this transaction Halaal?
Second, shouldn't the corporation share the
taxes and other fees involved, they are a
partner aren't they? And last, they ask for a
profit of 10% on the appreciation value of
the house after the ownership is transferred
to me, that is if I buy the house for
$100,000 and after 15 years it is estimated
at $110,000, we are asked to pay 10% of the
$10,000 increase. What does Sharee'ah say
about this? They say if we want them to
share the yearly expenses with them, like
taxes and insurance, they want 50% of the
appreciation value. I know it seems
complicated, but it is not. I just want an
idea if this is ok or not, and what should be
changed to make this Halaal? May God
accept you efforts and reward you according
to your intentions.

Fatwa:
All perfect praise be to Allah, The Lord of the
Worlds. I testify that there is none worthy of
worship except Allah, and that Muhammad
is His slave and Messenger.

The way you bought the house is correct
[according to what you mentioned in the
question], and you and the corporation will
be partners in the house. However, renting it
with the method that is mentioned in the
question, as we understood that this renting
will end by owning the house, is not correct,
because that is renting and buying in the
same contract, at the same time, on the
same property. As soon as you pay an
amount of the rent, you automatically own a
part of the house. Indeed the correct way of
purchasing a house is mentioned by the
Islamic Fiqh Committee in his twelfth
conference held in Riyadh from 23 to 28
September 2000 as they stated:

1) There should be two separate
contracts, each one with a separate time
limit, on the condition that the purchase
contract is held after the rent contract, or
that there is a promise of owning the
property at the end of the rent period.
2) The rent should be real and not for
the purpose of buying.
3) The owner of the rented property
[landlord] should be the person who
is liable for the property. This means
that the tenant is responsible for any
damage he might have caused to the
property, or damage caused by his
negligence, and when the tenant is
no longer renting the place, he is
not responsible for anything.
4) If the contract includes insuring
the rented property, then the
insurance should be an Islamic
cooperative insurance and not a
commercial one, and it should be
the landlord who should be
responsible for the insurance and
not the tenant.
5) The rules of tenancy should be
applied throughout the rent period
on the contract that will lead to
owning the property, and the rules
of sale should be applied when
owning the property.
6) Maintenance expenses [other than
running expenses] should be on the
tenant and not on the landlord
throughout the period of tenancy.

Therefore, the above conditions should be
observed so that the tenancy agreement that
leads to owning the property would be valid.

Allah Knows best.

www.islamweb.net/en/article/152020/renting-contract-which-ends-by-owning-the-house

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