Fatwa: # 27491
Category: Business Matters
Country: South Africa
Date: 28th December 2013


Purchase of property without funds


I need guidance on the following please: A wanted to purchase a property but did not have the capital. B agreed to purchase the property at R1 250 000 and resell to A at a higher price. A had been to view the property either before or just after payment was made.

The funds were paid by B to the transferring attorney directly. However the property was transferred into the name of A. The agreed price was calculated on the highest rate a bank would have charged ie. 12% per annum. The price payable over 7 years being R1 853 537.28, at R15000 per month and the balance R7065,92, to be utilized to purchase a property with., which would be handed over to B on completion.

B also forwarded to A a further R150 000 for development as a soft loan. In addition A also spent around R130 000 of his own funds on the project. A only commenced payment at R15000 per month after 17 months due to being unable to oversee the development of the project to completion. A total of R195 000 has thus been repaid. Under pressure to settle the debt,

A wants to subdivide the property and sell off the subdivisions with the intention of maximizing financial gain on the sale.


Q1. Is the initial transaction permissible?

Q2. If not, how do the parties proceed?

Q3. Is it permissible for A to ask for an early settlement figure linked to the initial rate used to calculate the resale amount? To be paid from sale of subdivisions.

Q4. Or, Can A at this point hand ownership of the property to B, subdivide and sell the property on behalf of B, recoup his capital and repayments, and hand over the balance to B? 


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

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

You refer to various dealings in the query:

  • Purchase of a property
  • R150,000 loan for development
  • R130,000 spent on the project

We are unable to ascertain if all these are part of one deal or separate dealings. Furthermore, you refer to an amount of R7,065.92 to purchase a property; this is also unclear. In order for us to advise, please send a detailed questionnaire including dates of transactions and relevance of the transactions. Also, is there a dispute in the matter?


And Allah Ta’āla Knows Best

Hisham Dawood

Student, Darul Iftaa
Chicago, USA

Checked and Approved by,
Mufti Ebrahim Desai.


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