Buying a Foreclosure Home: Allowed?
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Buying a Foreclosure Home: Allowed?

Questioner

Abdullah

Reply Date

Sep 26, 2017

Question

As-salam `alaykum. Are we able to purchase a foreclosure home since the bank is the owner and seller at the same time? I have heard this to be allowed in Islam but not so sure? I am also wondering why a sheikh stated that ijarah loans is a fraud.

Mufti

Answer


Buying a Foreclosure Home

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.


In this fatwa:

Buying foreclosure is permissible. The bank is not the owner but rather the creditor who is permitted by court to sell in order to collect its debt.


In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Buying foreclosure is permissible. The bank is not the owner but rather the creditor who is permitted by court to sell in order to collect its debt.

Ijarah loan is a fraud because you make a loan with the bank and transfer the house and loan to a trust you create and the trust rents you and pays interest to the bank.

According to the Shari`ah, the trust and you are the same therefore creating a trust and making this transfer does not change a thing but the company ijarah/loan which tricks you into this takes some fees for this fraud.

They claim that under Canadian law the trust and you are not the same but this does not apply in the Shari`ah.

Allah Almighty knows best.




About Prof. Dr. Monzer Kahf

Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey

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