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IJAARAH: Hiring in Islam

Jun 15, 2010

WORDS TO REMEMBER:

Lessor: The one who lets out property under a lease. This is the owner of the property generally referred to as the landlord.

Lessee: The one who holds a lease. This is the person who hires or rents a property, generally referred to as the tenant. Ijaarah is the Islamic form of hiring and leasing. We mention a few important rules pertaining to Ijaarah.

1. When hiring premises (house, shop, etc.) it is Waajib to stipulate exact duration of occupation and amount of rental. If this is not done, the contract is invalid.

2. Once the keys of the premises are handed to the tenant, the contract is sealed. Now whether he occupies the premises or not, the rental becomes Waajib and payable. Even if the premises remained empty for the entire month, rental is still due to the landlord.

3. A lease is permissible in Shariah, regardless of its duration. The commencement of such an extended Ijaarah will either be the date stipulated in the lease, or the date when the tenant moved in. 4.None of the parties has the right to cancel the lease except for a valid reason. Such reasons will be mentioned later.

5. In the absence of a lease, the tenant may cancel the agreement at any time, but before the commencement of the next month.

6. NOTE: In Shariah, a lease does not have to be in writing, although it is preferable to have it in writing so as to avoid dispute later on. In verse 282 of Surah Baqarah, Almighty Allah instructs the
Believers to write down their business transactions, or to have witnesses at the time of the contract. Therefore, even a verbal lease will be valid and binding.

7. When vacating premises, the owner/landlord must be informed. Furthermore, the keys must be handed back to the owner, for if this is not done, the tenant will still be liable for rental as long as he holds on to the keys of the premises.

8. A three-day option to accept or reject a lease agreement is valid. Before the three days are up the prospective tenant must make his intentions known to the landlord.

9. If one let out premises to someone for the month of Muharram, for example, and to another person for the month of Safar, then such leasing is permissible. When Muharram ends, automatically the one lease ends, and the new one begins with the new tenant at the start of Safar. (Fatāwa Al- Hindiyyah)

10. When renting a house the tenant is not allowed to do any such work or activity on the premises which will cause serious damage to any part of the house. If he does, he is liable for the repairs.

11. However minor damages that arise from normal usage of the premises are not accountable, such as erosion of paint, rust, ware and tare of tiles and flooring, etc.

12. The landlord is liable for all repairs to the property. He may not charge the tenant for such repairs. Repairs include, painting, plumbing, electrical work, roof repairs, fixing of broken windows and doors, etc.

13. The tenant may not carry out repairs and then deduct the costs from the monthly rental. To do this he must get the express consent of the landlord.

14. In Islam it is permissible to hire out houses, businesses premises, clothing, utensils, vehicles, machinery, and equipment, as well as animals for riding or farming.

15. It is haraam to hire out premises to a person or company who will sell liquor, drugs, pork, video films, etc.

16. If a Muslim leases his premises to a non-Muslim retailer whose business is of predominantly halaal commodities, this is permissible. Hence if haraam items (such as wine, pork, haraam meats) form a small percentage of the non-Muslim trader’s income, this will not render the Muslim’s lease agreement null and void.

17. It is not permissible for a Muslim to let out his property for the use of a bottle store, tavern, shebeen, casino, gambling den, brothel, escort agency, or insurance broker . Similarly, it will be haraam to hire out a house or shop to a person who sells drugs, dagga, and similar substances.

18. In hiring out movable property that will be used by a particular person, the Shariah has stipulated that the user of such property must be stipulated and defined, after which another person will not be allowed to use the hired item except with prior permission from the owner. This is because different people might use an item in a different manner. For example, one individual might be a very careful and responsible driver, while another driver might be reckless and irresponsible. The vehicle used will obviously suffer more ware and tare under the second driver. (Al Bahrur-Raaiq) Movable property in this sense refers, to vehicles, animals, clothing, utensils, etc.

19. In the case of immovable or fixed property (houses, shops, warehouses etc.) the lessee (tenant) may occupy the premises, or he may allow others to do so. This does not affect the Ijaarah contract.

20. Nowadays Banks that offer Islamic finance for vehicles employ the principle of Ijaarah in their lease agreements. This is why they term it “Islamic Finance”. The vehicles are leased for a fixed number of months at a fixed monthly instalment. This is permissible. As stated in rule number one above, the duration of the lease and the monthly rental (or instalments) must be mentioned.

21. EMPLOYMENT: It is not permissible to hire the services of a non-mehram female if this entails violating hijaab laws and being alone with her during the course of her employment. (Fatāwa Al-Hindiyyah)

22. The employer is not liable to provide food for the employee unless this is the prevalent trend or standard practice in labour circles. In that case, provision of food (lunch etc) will form part of the contract. (Ibid)

23. When hiring employees, working times are subject to the prevalent trend in labour circles. (Ibid)

~ TAKEN FROM Al Farouq vol 3 no 7 ~

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