In the Name of Allaah…
Shaykh Saalih al-Fowzaan mentions that the Council of Senior Scholars has studied the modern “Rent-to-Own” schemes, and they have ruled that they are impermissible transactions, due to the prohibition of two contracts in one.
Audio: http://www.safeshare.tv/w/maZtfNemwq
Video: http://www.safeshare.tv/w/xetfuzAwnZ (different)
Rent-to-own schemes may also include some so-called “installment plans” for automobiles and property, where legal ownership remains with the seller until the payments are complete, which is essentially a rent-to-own contract cleverly disguised as an installment plan.
As an important reminder, we live in times of widespread deception and corruption, so let every Muslim be extremely cautious in how he approaches complex business transactions.
Written by: Moosaa Richardson
I would like to get more information about rent to own and the islamic rules concerning it.
As-Salaamu Alaykum wa Rahmatullahi wa Barakatu,
Jazakallahu khayran and thank you for posting something on this topic. These kinds of things are becoming more and more widespread, and the commentary above is very beneficial.
I have been thinking a lot about structuring large purchases between multiple parties (like buying houses in the west) in a way which is compliant with the perfect laws that Allah gave to us by way of Muhammad (may Allah’s peace and blessings be upon him), which would also be a sound financial decision (as much as one could judge such a thing) for all parties involved. To whom should I direct inquiries/ideas on the topic? Sadly, I do not yet speak Arabic, and I do not have access to scholars who could address these inquiries/ideas. I also do not want to share them openly, as someone could cause great harm with them if they are not halal.
Any advice you could offer in this way would be greatly appreciated.
Jazakallahu khayran.
What about 401Ks? Is it permissable to have stocks in the stock market? I’m going to school for business and i am afraid that i may be offered stocks in a 401K.
Assalaamu ‘alaykum, I don’t know if I’ve quite understood this.. I want to buy a phone and the only way for me to do so is to sign a contract where I pay an amount of money (depending on my calls and texts) every month and the contract continues this way until 2 years time. Is this a so called “rent-to-own” contract?
As-Salaamu Alaykum wa Rahmatullahi wa Barakatu,
I would like to buy some furniture, and the furniture store is offering me a 7% discount if I pay cash instead of the Rent-to-Own (most of their customers do the latter). I only intend to pay cash anyway, not to receive the discount, but to avoid the haram. Someone told me that giving discounts to customers paying up front is impermissible. Is this true? If it is true, does it mean that it would be impermissible for me to take the discount?
Jazakallahu khayran.
wa ‘alaykas-salaamu wa rahmatullaahi wa barakaatuh. There is nothing wrong with discounts on cash sales, so long as the price and product are both clear and agreed upon at the time of the sale. Furthermore, there is nothing wrong with paying in installments (not rent-to-own) at a price higher than the cash price offered. You might benefit from the 1428 Fiqh Classes in Toronto (Business Transactions): MP3s.
Asalaamu alaykum, an issue like many other issues we need to understand in this day and age is the affair of cellphones and contracts where u get the phone for 0 down and pay monthly etc if you could explain that would be great.
Wa ‘alaykum as-Salaamu wa rahmatullaah… Some contracts are a very complicated mesh or buying, renting to own, and service contracts, all in one. Is Islam, multiple contracts in one are forbidden.
ButBuy your phone, and keep that purchase separate from any requirement to use a certain service. Keep your contract clear and without any complicated ambiguities. Usually, the multiple contracts all bunched up into some “special price” is only a clever way to hide extra charges and higher rates anyway, so its ghaban (deception) in the contract anyway. And Allah knows best.Assalamu alaikum ustaadh.
You mean ‘buy your phone’, don’t you?
Baraka Allahu feekum
Wa ‘alaykumus-Salaamu wa rahmatullaah. Yes, thank you! Jazaak Allahu khayran.
As-Salaamu alaykum wa Rahmatullahi wa Barakatu,
If someone signs an agreement to do something, and he/she wishes to do something else which contradicts the agreement, what options are available to get out of the agreement, if any?
Jazakallahu khayran.
Wa ‘alaykas-salaam wa rahmatullaahi wa barakaatuh. If the agreement was permissible, he is required to fulfill it. “Fulfill all agreements, verily agreements will be asked about” [Meaning of Quran 17:34] The Prophet (sallallaahu ‘alayhe wa sallam) said (what means): “The Muslims are bound by their conditions (in their contracts).” [Sunan Abee Daawood, authentic] If you would like to get out of a permissible contract, come to an agreement with the other party. Perhaps they will be lenient and make a way out for you, giving up what they are due or part of it.
If the contract was haraam (like a “rent-to-own” scheme), then the contract was invalid and ineffective legally from the beginning. However, you may be living under non-Muslim rule and you may have mistakenly entered an impermissible contract. Try to reach an agreement with the other party to cancel the agreement. In some cases, Muslims elect to repel the harm of going to jail by fulfilling an impermissible contract. Not that Islaam requires that, but it is done to repel serious harm. However, be warned: This concept is often abused and people give verdicts to themselves about the permissibility of fulfilling haraam contracts again and again, to avoid “harm”. Yet, they continue to return to the same kinds of contracts. There is a clear difference between an honest mistake one repents from and continual, insolent violations of Allaah’s Orders as a normal business practice, And Allaah knows best.
I currently have a few “higher priced” items from a company that does “rent to own” furniture, electronics, etc. Is this permissible? ( more details: The items are offered at a cash price. If the cash price is not paid, fixed weekly installments are paid for a contracted term until a higher monetary amount is paid.) Does this count as an interest bearing loan?
In the negotiation stage, someone is allowed to offer you different ways of payment, either one cash payment or installments, and those prices are negotiable. He is allowed to say it is $100 cash right now, or $125 in installments. So long as the contract is clearly for one or the other, then the installment deal is permissible, even though you end up paying more than you could have paid in cash with one payment. This is regarding a pure installment agreement from a “rent-to-own” company, meaning there is no “rent-to-own” clause in the contract. And Allaah knows best.
What is the ruling on car sellers advertising 0℅ interest rate for new cars. The dealing is anyway done through bank. The price of the car is fixed and they say this is the monthly installment. They say it is 0℅ interest. How to approach it.
Assalamu Alaykum wa rahmatullahi wa Barakathuh, Hafidhakumullaah, this is abu yahyaa from India. I am planning to buy a phone from Amazon.com or flipkart. Com.and as you know we see the seller name and rankings etc on each item on these sites. Its the sellers who are actually selling But we are paying to these websites. is this come under selling what you don’t have? . These sites only act as intermediate. So is this permissible? 2:i wish to buy a phone as monthly installment. They ask me to take a bajaj finserve card for that. Its a third-party. And i will have to pay them 399 indian rupees for joining and if i didn’t use the card any year on that year i will have to pay 99rupees as card rent. But i can buy things from Amazon for zero interest monthly installments if i take this card. Is it permissible to buy using this card? Also what about monthly installments in these websites which have interest(means you have to pay more than its actual price if you pay whole amount in cash). In monthly installment method, i don’t know when they give its ownership. Either after paying fully or after first installment Jazakallah khair
Akhi Moosa, There are many Islamic Banks in the Muslim countries like Malaysia, So If I buy house directly by Cash the price is like for e.g 200K USD. If I buy that same house by installments via Islamic Banks they will increase the price to 250K USD and I can pay the bill by monthly wise but the rights of the house is still with the bank, If I didn’t pay the bill for like 1 or 2 months, they will get back the house and they won’t return the already paid money. They called this installment as profit selling but same thing was done in Non Muslims bank as Interest.
So could you please enlight this issue about Islamic Banks whether it’s permissible or not ? Whether scholars have difference of opinion on this type of “profit selling ” and what is the correct position ?
JazaakAllaahu Khayr Ustaadh
السلام عليكم رحمة الله وبركاة
May Allah bless you.
I have some questions revolving renting houses to disbelievers.
I want to buy an appartement in Marocco and rent it to toerists or locals using platforms like booking.com and AirBNB. I can put conditions like it’s impermissible to drink alcohol in the appartement
What is the ruling in this situation on:
– Couples wanting to rent the apartment.
Are there any points I should could take in consideration?
بارك الله فيك
وعليكم السلام رحمة الله وبركاته
You are not required to do question them about what they will do in a rented apartment for living, and you are not responsible for what the people who rent your apartment do, so long as the contract was for renting a place to stay or live. The basis of the contract is permissible, and you are not accountable for the disobedience they perform. After you know them to be people who are heavily into evil behavior, which is not the basis of the contract, but happens a lot, then you stipulate that they must remove those things (like alcohol), or you will not renew the rent contract again. This was explained by Sh. Ibn ‘Uthaymeen (رحمه الله) in his ash-Sharh al-Mumti’, v.10, pp.15-20.
بارك الله فيك
Thank you for your reply.
But do the couple’s have to be married to rent the apartment? What should I do for instance when a man comes with his girlfriend? I can still rent the apartment to them?
May Allah give you good
Asalamalikum,
firstly, what is ruling on renting house to mushriks who would keep false object of worships in the house ?
I can give it to muslims , but prbobelm is most of them where I live are from the deviant sects like barelvis, tablighis and is likely they would also carry out innovated practices in the house.
The main question Is – it must to I stipulate them (those from above whom I would be allowed to rent to) for not doing any of their false activities of shirk and bidah before renting ?
Or is it totally not allowed to rent to any of these categories of people because they likely would break the rules and so would be indirectly aiding the wrongdoing by providing shelter ?
Wa ‘alaykum as-Salaamu wa rahmatullaah. Renting houses to non-Muslims as basic homes to live in is permissible, and it is known that they disobey Allah on various levels in those places, yet it is permissible, and this is excessive questioning. Renting a building to those who would make it a pagan shrine or a place of disobedience is not permissible, but that is another issue. And Allah knows best.
Ustadh what about being a taxi driver. Most of the time you don’t know where you will be going until you take the job. Sometimes also you pick people up after they did their shopping and they most likely have alcohol within that shopping.
Is one permissible to be a taxi driver in a non Muslim country with the above issues involved?
Assalamu alaikum,
What if there are two separate contracts? The first being the one regarding the rent, and the second one stating that after fulfilling the first contract the ownership will be transferred to the loanee? This is the model that is followed in my country. [Question truncated here by admin]
Wa ‘alaykum as-salaamu wa rahmatullaah. You just described two contracts in one, but they are being incorrectly labelled as “separate contracts”. It does not matter what people call them, if one is tied to the other, they are NOT separate contracts.
Assalamualaikum,
If some part of salary is given in form of stocks then is it Halal because most of the tech-companies in US offer stocks as part of salary.
Wa ‘alaykumus-Salaamu wa rahmatullaah. If ownership of that stock is halaal, meaning the company sells halaal goods and services and its transactions are halaal (no ribaa loans or ribaa-based transactions!), then owning stocks in that company is halaal, whether you purchased them or received them as gifts or perks. And Allah knows best.
Assalaamu ‘alaykum Shaikh Moosaa:
What’s the permissibility of wholesaling real estate properties? In real estate wholesaling, a wholesaler contracts a home with a seller, then finds an interested party to buy it. The wholesaler contracts the home with a buyer at a higher price than with the seller, and keeps the difference as profit. Real estate wholesalers generally find and contract distressed properties.
Wa ‘alaykum as-Salaamu wa rahmatullaah. So long as this “middle man” does not make a contract to sell the house before buying it. Meaning: If he requires the buyer to commit to the purchase, that counts as a sale, and he has actually sold something before even owning it, and this is an invalid sale. But if he purchases the house which someone is interested in buying, obtaining the deed, without any commitment from the interested party to purchase, and then contacts the interested buyer and sells to him, then this is permissible. So there remains some risk that the potential buyer may lose interest and not purchase it. There are other options to this scenario to make things easier, including a more transparent deal, acting as the wakeel of the interested party, taking an agreed upon amount or percentage to get the house for them, and then purchasing it on their behalf. This is called “muraabahah”. Another option for someone in this kind of situation might be to stipulate a “khiyaar shart” a stipulation in the contract, that he can return it within a week for a full refund, if he wants to. So if his buyer pulls out, he can return the deed and get his money back. I’m not sure how acceptable this might be in large deals, but it is an option one can consider. And Allah knows best.
Assalamualaikum,
Is leasing a car for 3 years or 4 years where i would have to pay fix amount every month to car dealer permissible or haram?
Wa ‘alaykum as-Salaamu wa rahmatullaah. If the lease is basically a rental contract without any impermissible stipulations, then renting a car (short-term or long-term) is a permissible transaction. But pay attention: Lease agreements have pages of stipulations, many of which could potentially disqualify their permissibility. So you cannot really get a specific answer about a contract that is pages long without reviewing the contract and all its stipulations.
Assalaamu alaykum wa rahmatullahi wa barakaatuhu, A little off-topic but I hope you will pardon your brother. does signing a cell-phone contract with unlimited data and/or unlimited minutes fall under gharar/uncertainty/buying an unknown quantity, thus making it forbidden? May Allah عز وجل reward you for any insight
Wa ‘alaykum as-Salaamu wa rahmatullaah wa barakaatuh. I do not know of anything wrong with that, and I do not believe unlimited calls or texts qualifies as an ambiguity, and Allah knows best.
Asalam Alikum wa rahmatullahi wa barakaatuhu. If an agreement is reached where you pay fixed rent to the bank on a monthly basis for 2 years. After the 2 years, you have the option to buy the house, or continue renting to the bank? Because the rent contract is separate to the buying contract and this doesn’t overlap – Is this still regarded as two contracts in one? Jazakallah Karir.
Wa ‘alaykum as-Salaamu wa rahmatullaah wa barakaatuh. Yes, an option to buy within a rent contract is, by definition, a two-in-one rent and sale contract combined. It is two contracts in one. The solution: Separate the contracts into a rent contract where the renter may say, “I plan to give you the option to buy after the term of this contract, or perhaps we may continue with rent as is, we will negotiate and agree then, when the two-year rent contract ends…” At that point, he may or may not fulfill this intention, if it is not part of the contract. Once the language indicates these options are required, it becomes multiple contracts combined, and Allah knows best.
Asalam Alikum wa rahmatullahi wa barakaatuhu. Jazakallah Kharir for your reply. Allah barakfeek. To confirm, if an agreement is made between myself and the bank for a property, where the contract is to pay a fixed rent to the bank on a monthly basis for 2 years only (no option to buy within the contract or any other options). After the two years end, the bank gives me the option (on a separate new contract) to buy equity into the house, I then purchase a percentage of the house. I then sign another new separate contract where I pay fixed rent to the bank on a monthly basis for another 2 years. To confirm, as this is all on separate contracts, is this permissible?
Apologies for the number of questions but if someone is already in a contract that gives the options to: carry on renting, buy in installments or outright after the two year rental agreement ends, should he ask the bank to amend the contract or add an addendum to say it will negotiated after the fixed term.
Jazakallah Kharir again for your help.
Wa ‘alaykum as-Salaamu wa rahmatullaah wa barakaatuh. The “options” (for purchase or continued leasing, etc.) at the end of the contract have to be discretionary and not binding. Meaning: The bank may choose to end their contract totally, with no further options remaining available. So “options” which become available at the end of the contract, which are required to be available by the contract, these are problematic, and likely cause the contract to be considered multiple contracts in one, and thus impermissible. And Allah knows best.
Assalam alaykoum wa rahmatouLlah wa Barakatouhou dear Teacher,
My father said: “I will get one of these 3 (business) contracts”.
I told him: “Say ‘In cha Allah'”
He told me: “I said it in my hearth”
Me: “But say it out loud”
My father: “Allah knows what is in my heath”
I would like to ask, should ‘in cha Allah’ be said out loud, or in our hearth in enough? If you have knowledge of any “evidence” supporting onr oor the other, I am enthusiast to expand my knwoeldge.
Thank you, and have a great end of Ramadan!
Wa ‘alaykum as-Salaamu wa rahmatullaah wa barakaatuh. What is legislated of thikr (remembrance) is that these statements are to be said upon the tongue and intended in the heart (at the same time).
selaam elleykoem Ustaadh, is it allowed to enter into a lease through my employer to lease a bicycle. Your employer makes a contract that states that you have to pay x $ monthly from your gross salary for 36 months and then have the option to buy it for x $. after which you have the choice to hand in the bicycle or buy it. If you sign, the bank buys the bicycle and you rent the bicycle for 36 months and then you choose whether to hand it in or buy it. If you buy it, the bank makes a separate contract to buy it. If you add your gross salary and what you have to pay at the end, it comes out more expensive than the price of the store.
Wa ‘alaykum as-Salaamu wa rahmatullaah. The rent/lease must be separate and disconnect from any options to buy, otherwise it is multiple contracts combined into one, which is forbidden. It is essentially what is being addressed in the article above. And Allah knows best.