Ijarah Muntahiya bi'l-Tamlik (Lease Ending in Ownership) and the Validity of Conditions in a Saleالإجارة المنتهية بالتمليك وصحة الشروط في البيع

Questioner: What is the ruling on ijarah muntahiya bi'l-tamlik (a lease ending in ownership)?

As long as the man's intention is genuine leasing, there is no objection to this. However, an advance sum is typically paid, and the price may end up higher than one would expect — not necessarily cheaper — because the matter is not calculated on the basis of the monthly rent alone: there is an advance payment and a final payment, so that the price of the item is completed in full. Because of this, the price under such an arrangement is higher than under an ordinary lease. In any case, what concerns us here is the "ending in ownership" feature itself.

Its form is this: you lease a car, whether intending to eventually own it or not, and the contract between you and the company is that ownership does not pass to you, and that you are not obligated to purchase the car — the period that has elapsed is treated as rent. So you retain the choice: the contract runs for a specified period, at the end of which you either renew the lease, or pay what remains of the item's value and take ownership of the car, or cancel the whole arrangement, with neither rent owed nor a sale having occurred. This is permissible.

As for those who object that this amounts to "two contracts in one sale," the response is that combining two contracts within a single sale is not in itself objectionable, and the Prophet ﷺ did not prohibit this. As for the hadith in which the Messenger of Allah ﷺ forbade "two sales in one sale," what is meant by it is bay' al-'inah (a sale-and-buyback arrangement): its form is that you buy a car or an item on credit, then sell it back to the very person you bought it from, for cash. Here the item has entered the transaction merely as a legal device, while what is actually intended is the money — and this is riba. But if you sell it to someone other than the one you bought it from, this is called tawarruq, and it is permissible according to the more correct of the two scholarly views, since the need for it exists. The default ruling is permissibility, based on the general meaning of Allah's saying, exalted is He, "O you who believe, when you contract a debt for a specified term, write it down," and because the default ruling for contracts, conditions, and sales is permissibility. This is the position of the majority of the scholars, contrary to Ibn Hazm, who holds that conditions and stipulations in sales are void by default. This is a weak position; the correct view is that of the majority — that the default ruling for contracts, conditions, and sales is permissibility. Allah, exalted is He, says, "Allah has permitted trade and forbidden usury." Had the default ruling for stipulations and sales been prohibition, then no valid stipulations would exist among us at all, since the default would then be voidness; rather, knowing that the default is permissibility, restricted and regulating conditions were introduced for certain kinds of sales. On this basis, ijarah muntahiya bi'l-tamlik is permissible.

It is comparable to selling your house for one million riyals over a period of five years: if, after the five years, the buyer is unable to pay, and says, "I have nothing left to pay you with," while you had stipulated that if the period ends without payment you would take the house back — then in that case, when you take the house back, what has elapsed is counted as rent, since he could not have lived in it for free; the rent becomes the fair rental value. Likewise with the car: under ijarah muntahiya bi'l-tamlik you pay a specified monthly amount, owed as rent for the car; at the end of the agreed term, you either pay the remainder of the item's value — so that the rent converts into a sale — or you return the car to its owner, with neither party owing the other anything. This is permissible; the underlying principle is that the default ruling for contracts is permissibility, and the default ruling for conditions is permissibility as well, provided no evidence prohibits the specific condition.

For example, if I buy a load of firewood and stipulate that the seller deliver it to my house — a first condition — and unload it — a second condition — and also split it — a third condition — is there any objection to this? Or if I stipulate that he sell to me by this method and no other, is there any objection to that? These are conditions; one either accepts them or does not want them. So here are three conditions — should we say that the last one renders the whole transaction unlawful, and that every condition is unlawful? No. The Prophet ﷺ, in the story of Barirah — in the hadith of 'A'ishah in the Sahihayn — said, "Every condition that is not in the Book of Allah is void," from which it is understood that whatever does not contradict the Book of Allah is a valid right, even if it amounts to a hundred conditions.

As for construing the hadith of Abu Hurairah forbidding "two sales in one sale" to also mean "two conditions in a sale," there is no such wording in any of its narrations. There is another hadith mentioning "two conditions in a sale," but the two conditions referred to there are precisely this scenario of two sales in one sale, for he ﷺ said he was only forbidding two sales in one sale. Its form is this: you go to someone and buy a commodity from him; he tells you, "This is one thousand riyals in cash, or one thousand five hundred on credit"; then you take the item and go your way without settling on one price. This is one of the forms of the prohibition of two sales occurring within one sale — a credit sale and a cash sale — without the price being settled on either one: you take the item now, but will you later want to pay one thousand five hundred, or will he demand one thousand? Nothing has been agreed. This is forbidden and impermissible, and it also falls under this hadith from the angle of 'inah — when you buy the item from someone for one thousand on credit, then sell it back to him for eight hundred cash: this is two sales in one sale concerning the very same person, the commodity unchanged and the money what is actually intended, so it falls under the prohibition. As for construing the hadith as referring to "two conditions," that is very far from being included in it, even though some scholars have indeed construed it that way; but the wording of the hadith is "two sales in one sale" — it does not say "two conditions in a sale."

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