Darul Iftaa Mahmudiyyah

LARIBA wants the amount the other shareholder owes towards the remaining shares/units". Question#1: Does such a transaction/contract constitute riba? Is this transaction permissible under Sharia?

· 18 Rabiʻ I 1423 AH1 min readFatwa 5761English

Question

A question related to #4086Respected Mufti Ebrahim Desai Saheb, As-Salam Alaikum! I have two related questions (#4086 in Business Matters) regarding home financing scheme or model by a company called Lariba.com (http://www.americanfinance.com/). It based on Lease-To-Purchase model (as described on their web site). 1. Absence of Profit/Loss component: If because of some unforeseen circumstances, the beneficiary partner is unable to pay the rent, then the property has to be sold at the current market price. The proceeds divided based on the partners current equity in the property. However in practice, LaRiba does not want to "make or take" any "profit or loss". In such circumstance, LARIBA wants the amount the other shareholder owes towards the remaining shares/units". Question#1: Does such a transaction/contract constitute riba? Is this transaction permissible under Sharia?

Answer

We have not visited the site nor studied the contract offered by the company.

However, if as you have mentioned, that upon the sale of the house, the company (Lariba) insists on a fixed amount instead of accepting the resultant profit or loss, then such a condition will be an invalid condition in the contract. The contract will thus be defective, and the transaction will not be permissible in the Shari'ah.

and Allah Ta'ala Knows Best

Moulana Imraan Vawda
FATWA DEPT.

CHECKED AND APPROVED CORRECT: Mufti Ebrahim Desai

Answered by
Moulana Imraan Vawda
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Source: Darul Iftaa Mahmudiyyah — https://askimam.org/public/question_detail/5761
Fatawa SA: https://fatawa.co.za/fatwa/askimam-5761

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