Fatwa ID: 04042
Answered by: Maulana Nabil Khan
Is it permissible to buy property on credit from a non-Muslim who makes a condition that 30,000 must be deposited? If the person then pays the rest by such a date, that 30 will go to the price, otherwise, it is lost if the buyer does not pay the rest on time?
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the name of Allah, the Most Gracious, the Most Merciful
In the contemporary purchasing of homes, it is common to see a process such as the following:
- Negotiate on a price the buyer and seller agree on.
- Designate a time that is preliminary legal information that can be obtained commonly known as subject removal before the existence of a binding contract.
- Give a Deposit as consideration to confirm a binding contract between both parties.
Step 3 is giving the deposit, which in this case is $30,000 that will be held by the trust for legal consideration of a binding contract. This amount of $30,000 will be incorporated in the total purchase price of the home when the entire home is paid during the completion date or transferring of title. If the buyer fails to complete the deal the deposit of $30,000 will be kept by the seller as per the norm.
To consider if this is permissible or not will require some key points to be noted.
First, it is permissible for a portion of the payment to be given upfront and the remaining purchase price to be paid later.
Second, this will not be considered a deposit in the traditional Islamic jurisprudence, rather this is truly a portion of the entire payment. The only resemblance it contains with a traditional trust/deposit (Wadi’ah) is that this is given in trust to the seller as a promise to follow through with this commitment. Therefore, in other aspects, it may also resemble a collateral (Rahn) type affair.
It will be permissible for the seller to hold this money in the case that the buyer does not follow through with the purchasing of the home.
Once two parties agree on the conditions of the property in regards to price and other details, then both agree to move forward in a binding contract then the terms of that contract are binding upon both parties.
Only Allah knows best
Written by Maulana Nabil Khan
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
 Al-Fatawa Al-Hindiyya Volume 3 pg 17.