Series of Answers by the Eminent Scholar Ata Bin Khalil Abu Al-Rashtah, Ameer of Hizb ut-Tahrir
To the Questions of the Visitors to His Facebook Page "Fiqhi"
Answer to Question
Not Relinquishing Ownership of a Car Until All Installments are Paid
To Mahmoud Nator
Question:
Assalamu Alaikum Wa Rahmatullahi Wa Barakatuh,
My question, O Sheikh, is that car dealers and car showrooms, when selling a car to a customer on installments, do not relinquish it (transfer ownership) until the last check is cashed. Is it permissible to buy in this manner?
Answer:
Wa Alaikum Assalam Wa Rahmatullahi Wa Barakatuh,
We have previously answered this topic in detail on 24/5/2015, and it seems you have not seen it. I will repeat it for you:
[This issue is known in Fiqh as "mortgaging the sold item for its price" (rahn al-mabi' 'ala thamanihi), meaning that the sold item remains pledged with the seller until the buyer pays the price. This issue does not usually arise if the seller and buyer are as the Messenger of Allah ﷺ described in the Hadith narrated by Al-Bukhari from Jabir bin Abdullah (ra):
رَحِمَ اللَّهُ رَجُلاً سَمْحاً إِذَا بَاعَ، وَإِذَا اشْتَرَى، وَإِذَا اقْتَضَى
"May Allah have mercy on a man who is easy-going when he sells, when he buys, and when he demands his dues." (Narrated by Al-Bukhari)
However, they sometimes disagree over whether the item should be received first or the price paid first. The seller may, after the sale contract, resort to withholding the goods—i.e., mortgaging them—until the price is paid. Consequently, this issue arises, and it is a matter of disagreement among jurists. Some permit it under certain conditions, some do not, and others permit it in some cases but not others... and so on.
What I find most weightier after studying this issue is as follows:
First: The Type of Sold Item:
- Items sold by measure (mikyal), weight (mawzun), or length (madhru’), etc., such as selling rice, cotton, or fabrics.
- Items not sold by measure or weight, etc., such as selling a car, a house, or an animal.
Second: The Price of the Sold Item:
- Spot price (hal), i.e., cash, where you buy the item for ten thousand cash paid immediately.
- Deferred price (mu’ajjal) for a period, where you buy the item for ten thousand to be paid after a year.
- A price where part is immediate and part is deferred, such as buying the item and paying a down payment of five thousand, and paying the other five thousand after a year, for example, or in monthly installments.
Third: The Shari’ah ruling varies according to the matters mentioned above:
The First Case: The sold item is not measured or weighed... such as a house, a car, or an animal:
The price is cash, i.e., you buy a car for ten thousand cash, and this is stipulated in the contract. In this case, it is permissible for the seller to withhold the goods; they remain pledged to him until the immediate price is paid according to the contract. The evidence for this is the Noble Hadith narrated by At-Tirmidhi, which he classified as "Hasan," from Abu Umamah, who said: I heard the Prophet ﷺ saying in the sermon during the year of the Farewell Pilgrimage:
العَارِيَةُ مُؤَدَّاةٌ، وَالزَّعِيمُ غَارِمٌ، وَالدَّيْنُ مَقْضِيٌّ
"The borrowed item must be returned, the guarantor is liable, and the debt must be paid." (Narrated by At-Tirmidhi)
Al-Za'im means the guarantor; Gharim means responsible. The point of evidence in the Hadith is in his ﷺ saying, "and the debt must be paid." If the buyer takes the item before paying the price, it becomes a debt, and "the debt must be paid." This means priority is given to paying the debt as long as the purchase was for cash. In other words, the price must be paid first as long as the price in the contract was immediate cash. Al-Kasani says in Bada'i al-Sana'i, commenting on the Hadith: "His ﷺ saying, 'the debt must be paid,' describes the debt as being paid in a general or absolute sense. If the delivery of the price were delayed after the delivery of the sold item, this debt would not be 'paid,' and this would contradict the text."
Accordingly, it is permissible for the seller to withhold the sold item until the buyer pays the price, so that there is no debt. This conforms to the contract because the sale was not on credit but for a cash price.
The price is deferred, such as buying a car for ten thousand to be paid after a year. In this case, it is not permissible to withhold the goods until the price is paid because the price is deferred according to the contract with the seller's consent. He cannot withhold the goods to guarantee their price as long as he sold them for a deferred price; he has forfeited his own right to withhold the goods. Therefore, it is not permissible for him to withhold them; rather, he must deliver them to the buyer.
The price is both immediate and deferred, such as buying the car with a down payment of five thousand paid in cash immediately, and the other five thousand to be paid after a year in one lump sum or in deferred installments. In this case, it is permissible for the seller to withhold the goods until the immediate portion (down payment) is paid. After that, it is not permissible for him to withhold the goods to recover the deferred payments, based on what we mentioned in points 1 and 2.
In summary: It is permissible for the seller to mortgage the goods for the immediate price; i.e., if the sale contract is for an immediate price paid now, the seller may withhold the goods until the buyer pays that price according to the sale contract.
Likewise, it is permissible for the seller to withhold the goods until the buyer pays the immediate down payment according to the sale contract.
It cannot be argued here: "How can the buyer mortgage his goods before taking possession of them, i.e., before owning them?" This is because a pledge (rahn) is only permissible for what is permissible to sell. Since the purchased item cannot be sold until it is possessed, based on the Hadith of the Messenger of Allah ﷺ narrated by Al-Bayhaqi from Ibn Abbas: The Messenger of Allah ﷺ said to Attab bin Asid:
إِنِّي قَدْ بَعَثْتُكَ إِلَى أَهْلِ اللهِ، وَأَهْلِ مَكَّةَ، فَانْهَهُمْ عَنْ بَيْعِ مَا لَمْ يَقْبِضُوا
"I have sent you to the people of Allah and the people of Makkah; forbid them from selling what they have not taken possession of."
And the Hadith narrated by At-Tabarani from Hakim bin Hizam, who said: "O Messenger of Allah, I engage in many sales; what is permissible for me and what is forbidden?" He ﷺ said:
لَا تَبِيعَنَّ مَا لَمْ تَقْبِضْ
"Do not sell what you have not taken possession of."
These Hadiths are explicit in the prohibition of selling what has not been possessed. So how can the sold item be mortgaged before possession?
This cannot be argued because these two Hadiths refer to sold items that are measured or weighed. As for items other than that, such as a house, a car, or an animal, it is permissible to sell them before possession, based on the Hadith of the Prophet ﷺ narrated by Al-Bukhari from Ibn Umar (ra), who said: "We were with the Prophet ﷺ on a journey, and I was on a difficult young camel belonging to Umar. It was overpowering me and getting ahead of the people, so Umar would scold it and pull it back, then it would move ahead again. The Prophet ﷺ said to Umar: 'Sell it to me.' Umar said: 'It is yours, O Messenger of Allah.' The Prophet ﷺ said: 'Sell it to me.' So he sold it to the Messenger of Allah ﷺ. Then the Prophet ﷺ said: 'It is yours, O Abdullah bin Umar; do with it as you wish.'" This is a disposal of the sold item by gifting it before possessing it, which indicates the completion of ownership of the sold item before possession and indicates the permissibility of selling it because the seller's ownership of it was complete.
Accordingly, it is permissible to mortgage the sold item before possession as long as it is permissible to sell it before possession. However, this only applies if the sold item is not measured or weighed... such as a house, a car, an animal, and the like. In the case of a sale for an immediate price, or in the case of an immediate down payment in the sale contract, it is permissible to mortgage the sold item before possession until the immediate price or the down payment is paid.
The Second Case: The sold item is measured or weighed... such as buying quantities of rice, cotton, or fabrics... In this case, it is not permissible to withhold the sold item for its price, regardless of the nature of the price: immediate, deferred in one lump sum, or installments.
If the price is deferred, it is not permissible to withhold the goods as explained above.
If the price is immediate, it is also not permissible to withhold the goods—i.e., mortgage them—because it is not permissible to mortgage measured or weighed goods before possession, according to the Hadith of the Prophet ﷺ mentioned earlier. In the case of a sale for an immediate price, the seller has two choices:
Either sell the goods for an immediate price, deliver them, and be patient, whether the buyer gives the price immediately or after a while, without mortgaging the goods... or not sell the goods at all without mortgaging them.
Accordingly, if a sale is concluded for an immediate or deferred price when the sold item is measured or weighed, it is not permissible for the seller to mortgage the goods until the price is paid.
This is what I find most weightier, and Allah is All-Knowing and All-Wise.]
Your brother, Ata Bin Khalil Abu Al-Rashtah
01 Dhu al-Hijjah 1441 AH Corresponding to 22/07/2020 CE
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