Musharakah Mutanaqisah and legal issues : case study of Malaysia

Abstract EN

This paper explores home financing through musharakah mutanaqiÎah in Malaysia and possible legal issues.

This paper explains that there are a few methods in the practice of implementing mushÉrakah mutanaqiÎah legally.

The first is where the customer is registered as the owner of the property and a charge is created in favour of the bank, and the second is where the bank is registered as the legal owner as the trustee for itself and the customer.

As for the implementation of mushÉrakah mutanÉqiÎah in the event of default, it depends whether there is a waÑd or not.

This paper also elucidates the issues facing musharakah mutanaqiÎah home financing for properties under construction and proposes an alternative model for solving the highlighted issues.

Lastly this paper raises and analyses possible legal issues that may arise in enforcing a musharakah mutanaqiÎah home financing contract where a legal charge is created and where a trust is created.