RESOLUTION
No. 110 (4/12)
On
"Lease Ending with Ownership and Leasing
Bonds"
Quote- The Council of the Islamic Fiqh Academy
of the Organization of the
Islamic Conference in its Twelfth
Session, held in Riyadh (Kingdom of Saudi
Arabia) during the
period from 25th of Jumad Thani to 1st 1421 H
(23-28/9/2000),
And
after considering the research papers on Lease Ending with Ownership
and Leasing Bonds submitted to it, and listening to the
discussions of its
members, experts and some other
Fuqaha'a,
Decides the following:
1.
Lease Ending with Ownership
Firstly: The criteria for
permitted and prohibited forms are as follows:
A) Prohibition
Criterion
When the deal involves conclusion of two different
contracts at
the same time, for
the same commodity and for the same duration.
B)
Permissibility Criteria:
1. The
presence of two contracts that are totally separate and
independent
with respect to time of their conclusion and in which the sale
contract succeeds the lease contract, or the presence of a
promise that
would enable the lessee to become the owner at the
end of the contract
period. In this connection Option and Promise
stand on equal footing with
regard to their Shari'ah
rulings.
2.There should be a genuine desire from the two parties
to conclude the
lease contract and not just to use it as a mere
veil for the sale contract.
3.The leased property should be
guaranteed by the owner and not the lessee.
In this sense the
owner should bear any damage that is not caused by misuse
or
negligence of the lessee. The lessee has to bear nothing even if such
damage has made the property completely useless.
4.If the
contract includes insurance of the property, insurance should be
made according to the Islamic methods and at the expense of the
owner alone.
5.Throughout the lease period the contract should be
subjected to Shari'ah
rulings on Ijarah, whereas Shari'ah rulings
on Ownership should be observed
when ownership of the property is
shifted to the lessee.
6.The cost of maintenance, excluding
operational expenses, should be borne
by the lessee throughout
the lease period.
Secondly: Some
Prohibited Forms of the Contract:
A)
A lease Ending with Ownership contract that leads to transfer of
ownership to the lessee against the amounts of rent he pays
during the
contract period, without signing a separate sale
contract. In other words,
when the same lease contract
automatically changes into a sale contract.
B)A lease contract
according to which the property is given to the lessee
against a
specific amount of rent and for a specific period of time,
coupled
with a sale contract that becomes effective only when the lessee
pays the whole amount of rent agreed upon, or at a certain date
in the future.
C)An appropriate lease contract including an
option for the owner to sell
the property to the lessee, at the
end of the leasing period.
The above juristic opinions have been
adopted in the resolutions of various
Shari'ah boards including
the Board of Eminent Shari'ah Scholars of the
Kingdom of Saudi
Arabia.
Thirdly : Some Permissible Forms of the Contract
A)
A lease contract that enables the lessee to make use of the leased
property against a specific amount of rent and for a specific
period of
time along with a separate contract offering the
property as a gift to the
lessee. The latter contract becomes
effective at the end of the lease
period and when the lessee has
paid all the amounts of rent agreed upon. A
promise from the
owner to give the property as a gift to the lessee, after
the
lease period and full payment of due rent, is also acceptable (as per
Resolution No.13/1/3 on Hibah which has been passed by the
Council in its
Third Session).
B)A lease contract offering the
option to the lessee to purchase the
property, after the lease
period and full payment of due rent, at the then
prevailing
market price (as per Resolution No. 44(6/5) issued by the
Council
in its Fourth Session).
C)A lease contract that enables the lessee
to make use of the leased
property against a specific amount of
rent and for a specific period of
time coupled with a promise
from the owner to sell the property to the
lessee, after full
payment of due rent, at a price to be mutually agreed upon.
D)A
lease contract that enables the lessee to make use of the leased
property for a specific amount of rent and a specific period of
time, while
the owner gives the option to the lessee to own the
property at any time if
he so wishes. The sale, in this case, is
to be made according to a new
contract on due time and at the
then prevailing market price (as per
Resolution No.44/6 (5) of
the Council), or at any other price to be agreed
upon at the time
of concluding the sale contract.
Fourthly: There are some other
forms of Lease Ending with Ownership that
still remain
controversial among Muslim jurists. Such forms need a thorough
study
to be presented to the Council in one of its forthcoming
sessions.
2. Leasing Bonds
The Council recommends preparation of more researches and studies
on
this subject so as to be considered in one of its forthcoming
sessions.
And Allah (S.W.T.) knows better. Unquote
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