2. THE LESSEE
Question 187 Leasing to a Riba-based Bank
Will it be lawful to lease to a riba-based bank so that it may open a branch to conduct its (riba-based) business?
Fatwa
The legal presupposition is that ijarah is lawful in all cases. With regard, however, to a lease for a bank which is not compliant with Shariah precepts, such that it does not discriminate between halal and haram transactions, it will be prudent to avoid such a lease so as to preclude ambiguity and to block ostensibly legitimate means to illegitimate ends.
Question 188 Leasing a Building to House the Employees of a Riba-based Bank
Will it be lawful to lease a building to the employees of a riba-based bank?
Fatwa
Yes, it is lawful to lease a building to the employees of a riba-based bank.
Question 189 Leasing to a non-Muslim Embassy
Is it lawful for the bank to lease property to a foreign, non-Muslim embassy?
Fatwa
The Board is of the opinion that it will be lawful to lease property to such an embassy. This is because the contract is for the use of the property as space for carrying out the embassy’s business, and that is lawful. With regard to what certain of its occupants may be involved in on the property, whatever prohibited activities, the sin will be theirs alone and has nothing to do with the contract. This is something that occurs incidentally, and may as well be occasioned by any lessee, Muslim or non-Muslim. It is not a condition of ijarah that the lessee be a pious Muslim.
Question 190 Leasing Aircraft to Airlines Serving Liquor
Is it lawful to lease an airplane to those who would serve liquor to their passengers, Muslims and non-Muslims alike?
Fatwa
The Board considered the fatwa of the Ministry of Awqaf, no. 28A/89 and agreed with it. As that fatwa is suitable as an answer to this question, it is reproduced here:
It is lawful for a Company in possession of aircraft to lease its airplanes to other airlines if the purpose of the lease is a lawful one, like the transport of passengers or freight that is not haram. This will hold even if the lessor Company learns that the lessee engages in the sale of liquor, or that its passengers carry it with them. The reason for this is that the legal presumption in regard to leasing is that it is lawful. The occurrence of [things like] the sale of liquor [is incidental] and not a part of the subject of the lease; and the sin will be the doer’s. Even so, it will be best for the lessor Company to stipulate to the lessee, as a condition in the contract, that the lessee will not be allowed to seil liquor or other unlawful items aboard its aircraft.
If the purpose of the lease, however. is an unlawful one, like the transport of wine, or carrying weapons to the enemies of Islam, then the lease will not be lawful. [If such a lease is signed] then the owner of the aircraft and everyone else involved in the lease will have committed a sin.
Therefore, if the subject of the lease is a lawful one, the lease will be lawful. But if the subject of the lease is unlawful, the lease will be unlawful.
Accordingly, the Board advises the Finance House to make known to its client its preference that liquor not be served to passengers, nor sold, nor carried, nor consumed while on board. In this manner the Finance House may remain consistent in its commitment to comply with the precepts of the Sharp ah of Islam.
Question 191 Leasing to Companies Dealing Primarily in Interest
Please explain the Sharp ah position in regard to the Jordan Islamic Bank leasing certain of its properties to companies or institutions whose primary business is transacting by means of interest.
Fatwa
Since it is unlawful for a Muslim to aid or assist in the commission of sin, and since transacting by means of interest is sinful, and since the primary business of these companies and institutions is transacting by means of interest, then the best that can be said of the proposal in the question is that it involves assisting in the commission of sin and is therefore unlawful. Hence, I will advise that no lease be offered for the purpose mentioned.
Question 192 Leasing to Retailers of Prohibited Items
What is the SharP ah ruling in regard to leasing real estate to supermarkets, restaurants, hotels, or tourist shops whose products and services may include Islamically prohibited items?
Fatwa
If the lease of real estate is for purely prohibited purposes, like a bar, or a church, or a nightclub, then the lease contract is prohibited and legally void because the benefit, or subject of the contract, is prohibited. It is not lawful to lease property to a business concern whose primary business is in prohibited goods or services.
It is lawful, however, to lease property to a business concerned whose primary business is in lawful goods or services even if these are supplemented by income from unlawful goods or services.
Question 193 Leasing to a Health Club
The bank financed a building in accordance with the conditions for financing limited partnerships. One of its clients then leased a part of the property for the purpose of operating a health club that provides health and related services, including Consulting and exercise, for its membership which is composed exclusively of men of different ages. The services offered by the club include the following: 1.exercise rooms, 2. saunas 3. massages, 4. swimming, 5. health-related Consulting, 6. Cafeteria Please inform us of the Shari’ah position in regard to leasing property for use as a health club exclusively for men.
Fatwa
Leasing in the manner described in the question is lawful from a Shari’ah perspective on the condition that Islamic teachings regarding dress and behavior are observed; nor should any practice be allowed which runs contrary to the rulings of the Shari’ah or generally accepted behavior.
Question 194 Dissolution of the Ijarah Contract
It sometimes happens that a lessee will return the item s/he has leased during a period for which payment has already been made in advance. Will it be lawful for us to again lease the item before the period of the previous lease has expired?
Fatwa
If the lessee returns the item owing to compelling circumstances, the remainder of the lease payment must be returned because the lease will be considered to have been dissolved for a valid reason. According to the Sharp ah, ijarah may be legally invalidated by compelling circumstances.
If the lessee returns the item simply because s/he wants to return it, then if the bank agrees to such a return, the remainder of the lease payment must be returned to the lessee because a mutual dissolution of the lease, much like iqalah, has taken place.
If, however, the lessee stipulates that the item must remain in his/her name until the completion of the lease period, and that it not be leased to another, then the remainder will not be returned and the item will remain at the disposal of the lessee until the lease expires.
Question 195 Seeking Dissolution of the Contract after the Lease has Begun
A contract for the lease of a störe was signed on 1/9/85 in which it was stated that the lease period would begin on 1/12/85. Thus the lessee was given a period of three months, September, October, and December, to ready the störe and obtain licences. On the 28th of December, the lessee sought the dissolution of the contract and the return of lease and insurance payments. Will it be lawful for the bank, as a party in agreement to the dissolution, to deduct a part of the lease and insurance payments?
It should be further explained that if the störe were to be leased (to another party) today, the lease would not begin until 1/3/96 because the new lessee would be given January and February to make necessary preparations.
Fatwa
If it can be established that there were compelling circumstances which lefit the lessee with no choice but to dissolve the contract after it had begun, then the ijarah will be considered dissolved from that date. The lessor will be entitled to receive payment for the period of the contract’s validity until the date of dissolution, and the rest may be returned to the lessee.
Question 196 Assigning Responsibility for Damages
Certain of our lessees ask the bank to pay damages for furniture and household effects damaged or lost as a result of flooding in the properties they lease. For our part, we are unable to assign responsibility for these damages owing to ambiguities concerning the reasons for its occurrence. What is the Sharp ah ruling in this matter?
Fatwa
The relevant Shariah principle in this case is that responsibility for damage is to be borne by those who bring it about. Therefore, each case must be studied on its own merits, and in light of custom and legal precedence.
Question 197 Discounted Lease Payments
The Real Estate Department of the bank offers a special discount to newlyweds who lease flats from the bank. Please clarify the following points from a Shari’ah point of view.
1. Is it lawful for a new lessee to benefit from the newlywed discount while a prior lessee who becomes a newlywed may not?
2. Is it lawful for a prior lessee who becomes a newlywed to benefit from the discount if s/he requests it while his/her neighbor in the same State does not because s/he does not know about the discount, or does not request it?
Fatwa
A newlywed lessee in whose contract such a discount is stipulated is legally entitled to benefit from it and the bank must honor the discount. With regard to lessees in whose contract no such stipulation exists, who saw no notice of the discount and to whom no mention of the discount was made, the bank is not required to offer the discount. However, there is nothing to prevent the bank from offering the discount to those clients.
Question 198 Maintenance of Equipment
Who is responsible for maintenance in the lease of equipment?
Fatwa
A number of studies were considered on the subject of the maintenance responsibilities of lessors and lessees in equipment and machinery leases, including what conditions the lessor may impose upon the lessee regarding maintenance, and the lawfulness of stipulating that the lessee purchase at his/her expense Islamic insurance for the leased equipment. The Board, however, decided to delay its findings on the subject until further study had been completed, requesting that the issue be discussed at the next seminar.
Question 199 Maintenance Responsibilities
Who is responsible for the maintenance of a ship after it has been leased? Is it lawful if the lessor and lessee agree that the lessee will be responsible for the expense of maintenance? Likewise, is it lawful for the lessor to promise the lessee to gift him/her the ship on the condition that the lease be paid in füll? Is it lawful to issue an offer in which a time is specified for the purchase of the ship at a certain price?
Fatwa
The owner is responsible for maintenance related to the object that is leased, and on which the continued Performance and usufruct of the object is customarily understood to depend, so long as there is no written agreement to the contrary.
It is, moreover, lawful for the lessor and lessee to agree that the lessee will be responsible for normal maintenance costs other than those related to the continued Performance and usufruct of the leased equipment, so long as these costs are regulär and customary such that ignorance of the same will not lead to dispute. This is in regard to a ship leased without the elements necessary to its operation. In regard, however, to the lease of a ship that is leased with the elements necessary to its operation (like a captain and a crew), it will be lawful for the lessee to be responsible for them (i.e., wages and benefits and so on), because it will be as if s/he leased the ship without them. The costs of maintenance, however, will be in accordance with the two categories outlined above; the owner will be responsible for maintenance essential to the continued operation or usufruct, while the lessee will be responsible for everything else.
It is further lawful to make the lessee responsible for insurance, if the amount is known, because it may then become a part of the lease payment. It is also lawful in ijarah for the owner to promise to make a gift of the leased object to the lessee when the lease expires on condition that all payments are made in their entirety. (The OIC Fiqh Academy took this position in their third session.)
Likewise, it is lawful to issue an offer in which a time is specified for the sale of something for a certain price. The one making the offer will be considered legally bound to (honor) the offer for the duration of the time specified; and the other party may accept or refuse during the same period. This principle was adopted by the jurists of the Maliki school.
Question 200 Airlines Serving Alcohol
Is it lawful to sell or lease aircraft to an airline when it is known that the airline serves alcohol to its passengers with meals?
Fatwa
The subject of the lease contract is the transport of passengers, and that, as a legal presumption, is lawful. Serving alcoholic drinks during meals is incidental to the contract and, as an action that may be ascribed to the lessee, the sin in doing so will be the lessee’s. The sinful activity occurs here pursuant to something else, and not on its own. If the aircraft is leased for the purpose of transporting alcoholic drinks, that will not be lawful because the subject of the lease is prohibited. It should be clear that if it is possible to stipulate that this (serving alcohol to passengers) will not be allowed, thus emphasizing the prohibition of intoxicants, then that would be ideal.
Question 201 Property Used for Prohibited Purposes
What is the ruling in regard to property leased for a lawful business which is later made by the lessee to include prohibited business?
Fatwa
In ijarah consideration is given to the fundamental purpose of the activity for which the leased property is to be used. In this case, that purpose is trade in lawful goods, and therefore the lease is lawful. The responsibility for adding prohibited goods to the trade inventory is the lessee’s. In the meantime efforts may be made to find means and draft conditions that may be put to use to prevent this sort of thing in the future when the opportunity arises (like the renewal of the lease). This differs from the leasing of property to be used particularly for the sale of wine or pork, regardless of how these are viewed by Christians. Such a lease is unlawful for the reason that the ruling for us, as Muslims, in regard to these substances must receive legal consideration.
Question 202 Purchasing Aircraft and Leasing them to Airlines Selling Alcohol
Is it lawful for the bank to purchase aircraft and then lease them to airlines whose policies include offering alcohol for sale to its passengers?
Fatwa
The Board previously answered a question regarding the purchase of aircraft and their resale to airlines that serve liquor to their passengers. That fatwa ended by stating the legal maxim to the effect that the legal presumption with regard to all things is their lawfulness, unless there is certainty at the time of contracting that the purpose for which the object of the contract is to be used is unlawful. In that case, the contract will be unlawful owing to its resulting in the commission of the unlawful and its abetting in sinful acts prohibited by the Sharrah. This is a general Observation that applies to everything intended for unlawful purposes.
The Board is of the opinion that its earlier fatwa will also apply to the purchase of aircraft and then their lease to airlines because the basic purpose (in both cases) is to use the aircraft to transport passengers and goods, which is lawful from a ShaiTah perspective. Nonetheless, and like so many other things, the aircraft may be used for unlawful purposes, like the sale of liquor to passengers. Then, if the bank is certain that the policies of the airline seeking the lease include the sale of liquor to its passengers, then it will not be lawful for the bank to purchase the aircraft with the intent of leasing it to that airline. It should be noted that the bank has a greater responsibility when considering such a lease, for the danger of falling into sin is greater when the bank owns the aircraft and is therefore directly responsible for the use of its aircraft for unlawful purposes.
Question 203 Leasing to a Coeducational School
A foreign private school approached the bank with a proposal that it build a school to include both primary and secondary education for approximately four hundred and fifty boarding students. It is well known that the system of education at the school is coeducational, mixing boys and girls. The ways in which the bank may participate in this project are as follow:
First: Construct the school in accordance with their particular specifications, and then give the client a long-term lease for the facility such that the buildings and the ground they are built on continue to belong to the bank.
Second: Construct the school at their expense through a contract of istisna’ (commissioned manufacture) on monthly or yearly payments, and the land and buildings become the property of the school.
Fatwa
There is no impediment from a Shari’ah perspective to building a coeducational school or to leasing it. The best thing, however, would be not to so as to block ostensibly legitimate means to illegitimate ends.
Question 204 Leasing to Money Changer
Resubmitted for the consideration of the Board is the subject of whether or not it is lawful to lease to a money-changing business.
Fatwa
Having studied the business license of the Company, it appears that there is nothing there that runs contrary to the Shari’ah, like borrowing or lending on the basis of riba, or the acceptance of delayed payments (in exchange for cash up front). The business of exchange is fundamentally concerned with transacting sales in gold and silver, and is permitted by the Shari’ah. Then, as long as the business is not tainted by unlawful activities like the ones mentioned, it is lawful to lease property to them. The lease should stipulate, however, that they will have to vacate the premises if they engage in unlawful transactions.
Question 205 Foreign Schools
What is the ruling in regard to a request by a foreign concern for the construction of a school to be operated in the manner of non-Islamic foreign schools? It should be understood that courses in the Arabic language and Islamic Studies are supervised by the Ministry of Education.
Fatwa
It is not lawful to finance the construction of a school that will be operated in the manner of foreign schools. This is because it has been established, and it is well known, that such schools have contributed, and continue to contribute, to the leading astray of Muslim youth in ways in which the supervision of government agencies is rendered ineffective, particularly when parents themselves are lax in these matters.
By Yusuf Talal DeLorenzo.
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