Conventional and Islamic finance of home purchase : ISNA house financing scheme

Fatawa Question

As-Salamu Alaykum Sheikh Monzer, I pray you and your family is constantly getting closer to Allah (swt). Alhamdulillah Iana financial is progressing-slowly but surely :) (www.ianafinancial.org) In Sha Allah we'll be handing out our fourth interest-free loan within the next couple of days and our monthly-donor pool is gradually increasing Alhamdulillah. Make Duah. Also, send us your advice and comments. I'm curious about the following Islamic Housing scheme by ISNA Canada, www.isnahousing.ca I'm not sure if you reviewed this, but I'm particularly wondering about the following clauses : 1-“B) Monthly occupancy charges (rent) will be based on comparable housing units and their relative costs, and these may be reviewed every year.” I see in the yearly revision an exploitation of Muslims in comparison with banks that makes the review every 5 or 7 years, why do we need to make more profit from Muslims than the conventional banks from their customers ? 2-“F) Members are not allowed to rent, lease or sublet all or part of the housing unit.” This one seems unfair. If I own part of a home, and am wholly responsible for the home ; why can't I rent out all or at least the part of it that I own ? 3-“D. The transaction of sale between the IHC and the occupant member will be based on the original purchase price of the housing unit.” I don't understand this, the sale should be based on real-market-value...regardless of who is buying, and that could mean a profit or loss either way. I’m I misunderstanding ? 4-“E. All expenses associated with the transfer / sale of the housing unit will be the responsibility of the member and not of the IHC.” Again, I don't see why these expenses aren't proportionate ? 5-“F. If a member wants to transfer / sell his / her housing unit within one year from the date of acquisition by the IHC he / she will be required to pay a penalty of $ 5,000.00.” This clause seems unfair as well-especially as there is no explanation behind it. 6-“G. Beginning after 12 months from the date of acquisition of the housing unit in a calendar year, the member will have to buy $ 5,000.00 worth of shares or 10 % of the purchase price of the housing unit, whichever is less, every year.” Is this allowed to be stipulated in the contract ? 7-Lastly, I heard - I'm trying to confirm this with ISNA-that after determining what the average rent is in the area, ISNA will add an extra $ 200-$ 300mn to that value before determining the proportionate rent payment, if this is true, is this allowed ? Jazaka Allah Khayran ya sheikh, Sharafe

Fatwa

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Publication Date

2010-01-07

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Housing
• Financing
• Loans
• Purchasing
• Real property
• Commercial finance companies
• Usury
• Subprime mortgage

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-734919

• APA
• MLA
• AMA