House purchase via two transactions

House purchase via two transactions

House purchase via two transactions

Question

Person A wishes to purchase a house worth £150,000, however, he does not have the money. Person B says to him that I will buy it for you, you can pay me in instalments, however, instead of £150,000, you pay a fixed price of £160,000 and as soon as you pay this, the house is yours. Is this lawful?

بسم الله الرحمن الرحیم

Answer

Islam prohibits combining two transactions into one, therefore this is not permitted unless the two transactions occur separately and independently.

Person A can purchase the house from the owner at £150,000, this is the first transaction. He can subsequently sell the house to Person B for £160,000 or whatever price is fixed between the two parties. The price must be fixed. As the transactions are separate, after the first transaction, Person A cannot compel Person B to purchase the house nor can Person B compel Person A to sell the house, although morally the understanding should be honoured.

In relation to the second contract, the easiest solution is to sell the house fully with the payments in instalments. Thus, the ownership will transfer Islamically at the point of transaction. The name on the title deeds can be changed after the last instalment, or immediately with a charge applied on the house until the final instalment is paid. There are also other options such as diminishing mushārakah.

عن أبي هريرة قال: نهى رسول الله صلى الله عليه وسلم عن بيعتين في بيعة، رواه النسائي (٤٦٣٢) وصححه الترمذي (١٢٣١). وقال محمد في الأصل (٢/٤٤٠، طبعة قطر): وإذا اشترى الرجل من الرجل بيعا على أن يقرضه قرضا أو يهب له هبة أو على أن يعطيه عطية أو على أن يتصدق عليه بصدقة أو على أن يبيعه كذا وكذا بكذا وكذا من الثمن، فهذا كله فاسد، انتهى. قال السرخسي (١٣/١٦): لنهي النبي صلى الله عليه وسلم عن بيع وسلف وعن بيعتين في بيعة، انتهى۔

Allah knows best

Yusuf Shabbir

15 Rajab 1441 / 9 March 2020

Approved by: Mufti Shabbir Ahmad and Mufti Muhammad Tahir