Buying Real Estate Through The Bank:
Dealing With Ihe Islamic Banks Such As al-Raajihi Or
Islamic Rulings -
Living Shariah Verdicts
Islamic Questions & Answers
I want to buy some real estate through one of
the Islamic banks such as al-Raajihi or al-Bilaad. Is
it permissible for me to sign a contract to purchase
with the bank without checking whether the property
deeds have been transferred to the name of the bank?
Or is it essential to see the property deed and make
sure that ownership has been transferred to the bank
before I sign any papers?
My second question is: the real estate I want to buy
is worth more than the amount that the bank has set
for buying based on my salary. Is it permissible for
me to give the bank the difference so that I can go
ahead with the purchase?.
Praise be to Allaah.
Buying a property through the bank is done in one of
The role of the bank is merely to finance the
transaction, so it gives the money to its customer or
pays it on his behalf, on the basis that the customer
will pay it back in instalments, with something extra.
This is a haraam, riba-based loan.
The bank buys the property, then sells it to the
customer. This is permissible subject to certain
(i) That the bank does not stipulate any penalty in
the event of late payment of instalments, because
stipulating this penalty is a kind of riba which is
haraam, whether the bank takes the penalty for itself
or distributes it to the poor. Please see the answer
to question no. 89978.
(ii) That the customer does not sign any purchase
contract or make a promise to purchase before the bank
takes possession of the property.
(iii) That the bank does not stipulate that a down
payment be made before it takes possession of the
property, because the down payment -- according to
those scholars who say that it is permissible, namely
the Hanbalis -- is not valid before the contract is
It says in Ghaayah al-Muntaha (3/79): It [the down
payment] means paying some of the price or rent after
drawing up the contract and not before. End quote.
But the majority of Hanafi, Maaliki and Shaafa'i
fuqaha' do not regard the down payment as valid and
they do not regard it as permissible for the seller to
take it, whether it is agreed upon after the contract
Dr. Muhammad al-‘Usaymi (may Allah preserve him) was
What is the ruling on the "Manzil Mubaarak" financing
program (buying a house in the name of the bank until
the loans are paid off) which is offered by al-Bank
al-‘Arabi and al-Raajihi bank?
Many commercial banks offer financing services for
buying real estate. In the riba-based banks, the
customer asks for financing, and the commercial bank
gives the money to the customer, who buys the house
and mortgages the title or ownership papers to the
bank. There is no doubt that this is riba-based
financing and is haraam.
As for the Islamic banks, after the real estate is
identified by the customer, the bank buys the property
in its own name and the title deeds are transferred to
it, then it sells it to the customer for a price to be
paid later with a stated, known amount of profit.
There is no doubt that this is permissible.
One of the matters that should be noted in this case
is that it is not permissible for the bank which
offers financing for real estate purchase to demand a
down payment from the customer before buying a
property. And it is not permissible for it to oblige
the customer to buy the property; rather the customer
has the choice of buying or not buying.
End quote from the Shaykh's website.
The point is that it is essential that the bank take
possession of the property before selling it to you,
and taking possession is done through a purchase
contract between the bank and the owner of the
property. It is not essential to register the property
in the name of the bank, especially if registering
involves payment of large fees as is the case in some
It is permissible to buy property from the bank by
instalments; it is also permissible to pay part of the
price and to pay the rest by instalments, such as if
you pay twenty thousand, for example, and pay the rest
in instalments in a manner that is compatible with
your salary and other commitments. There is nothing
wrong with the bank deciding the price of the house on
the basis of the number of years you will pay
instalments, so that if you pay part of it up front,
that will reduce the number of years during which you
pay in instalments, thus reducing the price of the
And Allah knows best.
Buying a foreclosed house if it
is sold at auction because the borrower is not able to
pay off the riba-based loan
Somebody mortgaged his house in return for a
riba-based loan, and at the end of the agreed period,
because the home owner was unable to pay off his debt,
the riba-based institution sold the house through the
court at a public auction. Because the house is
opposite to a mosque, some good brothers thought to
buy it from the one who bought it at the auction and
add its area to the mosque.
My question is:
1. What is the ruling on mortgaging the house in
return for the riba-based loan?
2. What is the ruling on buying this house that was
sold without the consent of its owner who was not able
to pay off the riba-based loan?
3. Does this purchase come under the heading of buying
something that was unlawfully confiscated?
4. What is the ruling on buying this house from the
second purchaser, when the story of its sale is known,
and adding it to the area of the mosque?.
Praise be to Allaah.
Borrowing money on the basis of riba is emphatically
forbidden and is a major sin, because Allah, may He be
glorified and exalted, says (interpretation of the
"O you who believe! Fear Allaah and give up what
remains (due to you) from Ribaa (from now onward) if
you are (really) believers.
279. And if you do not do it, then take a notice of
war from Allaah and His Messenger but if you repent,
you shall have your capital sums. Deal not unjustly
(by asking more than your capital sums), and you shall
not be dealt with unjustly (by receiving less than
your capital sums)"
And Muslim (1598) narrated that Jaabir (may Allah be
pleased with him) said: The Messenger of Allaah (peace
and blessings of Allaah be upon him) cursed the one
who consumes riba and the one who pays it, the one who
writes it down and the two who witness it, and he
said: they are all the same.
So it is not permissible to take out a riba-based loan
or to mortgage the house in order to take out such a
The one who takes out a riba-based loan is not obliged
to pay the interest; rather he has to pay back the
original amount of the loan only. If he is not able to
do that, and he gave something to the lender as
collateral, it is permissible to sell the collateral
in two cases:
1. If the borrower gave permission to sell it, whether
he gave permission at the time the contract was drawn
up or at the time payment became due.
2. If the court rules that it is to be sold.
It says in Zaad al-Mustaqni‘: When the debt is due to
be repaid and he refuses to pay, if the borrower gave
permission to the lender to sell it, he may sell it
and pay off the debt, otherwise the judge may force
him to pay off the debt or sell the collateral. If he
does not do that, the judge may sell it to pay off the
debt. End quote.
The court may appoint someone to sell it, whether it
appoints the lender or someone else.
It is stipulated that the one who sells it, whether it
is the lender or someone else appointed by the judge,
should sell it for the market price and not for less
It says in Mughni al-Muhtaaj, 3/71:
The collateral should not be sold except for the
current price in the local currency of something
similar; if that condition is not met, then the sale
is not valid. But if it is a little below the going
price, which often happens when people bargain, that
does not matter because they usually overlook that.
Based on that, if the item is sold because the
borrower is unable to pay off the original loan, and
that is done on the orders of the court and it is sold
by public auction, there is nothing wrong with that
and it does not matter if the seller did not give
consent, because selling an item when its owner is
reluctant is valid if he is forced to do so for a
legitimate reason, and this is not regarded as buying
something that was unlawfully confiscated or taken by
Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him)
said: The words ‘so it [the transaction] is not valid
if he is forced to sell it without a legitimate
reason' – he commented on this by saying: If it is
sold when the owner is reluctant for a legitimate
reason, there is nothing wrong with that, because this
is restoring the dues of others, i.e., if we force
someone to sell something for a legitimate reason,
this is restoring the dues of others, and is not
wrongdoing or transgression.
For example: a person gave his house as collateral to
someone for a debt that he owed to him. The time for
repayment came and the lender asked for his money, but
the borrower who owed the debt refused to pay. In this
case, the borrower may be forced to sell his house, so
that he can pay off what he owes to the lender.
Another example: A piece of land was owned by two
people, and it was a small piece of land that could
not be divided. One of the partners asked the other to
sell, but the other partner refused. In this case the
land may be sold despite the objections of the one who
refused, because there is a legitimate reason, which
is to ward off harm from his partner.
So the guideline is: If forcing someone to sell is for
a legitimate reason, the sale is valid even if the
seller does not give consent to it. Because in this
case we are not committing a sin by wronging him or by
any other means, so it is permissible. End quote from
al-Sharh al-Mumti‘, 8/108
There is nothing wrong with buying a house from the
second purchaser and adding it to the mosque.
And Allah knows best.