Taking a loan from someone whose money includes both lawful and unlawful earnings
11-10-2014 | IslamWeb
Question:
My father has involved in interest lik pledging half house property and getting loan and some other By way of interest now my father has both halal money as well as haram money and I have an idea of starting new business by borrowing money from my father and my question is dat if I start business by borrowing money from my father den my business would be halal or haram I want clear explanation regarding this and second question is dat wen we borrowing money from someone is there any rules to check whether dat person s having halal money or not
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and messenger.
There is nothing wrong with taking a loan from your father since, according to the opinion adopted by Islamweb, it is permissible to engage in monetary transactions with a person whose wealth is mixed with lawful and forbidden earnings, especially if the reason for prohibition has to do with the way the money has been earned, in which case, the prohibition of such ill-gotten wealth is related to the person’s liability but not to the ill-gotten wealth itself.
Ibn ‘Uthaymeen 
said, “Some scholars have held that when the prohibition is associated with the means through which the money was earned, then the sin is on the person who earned it and has nothing to do with the person who earns it through lawful transactions with the one who had earned it unlawfully. This is in contrast to what is deemed prohibited in itself such as alcohol, unlawfully usurped items of wealth, and so on. This opinion is strong and well supported by evidence. The Prophet, sallallaahu ‘alayhi wa sallam, bought food for his family from a Jew. He, sallallaahu ‘alayhi wa sallam, ate from the sheep that a Jewish woman from Khaybar gave him. He, sallallaahu ‘alayhi wa sallam, also accepted the invitation of a Jewish man. It is well-known that most of the Jews deal with usury and consume unlawfully usurped wealth.” [Al-Qawl Al-Mufeed]
It should be noted that all things are essentially lawful [unless proven otherwise]. Therefore, the person is not obliged to investigate the earnings of the person with whom he is dealing and whether his earnings are ill-gotten or not. Instead, he should rely on the default situation that his wealth is lawful and that the Muslim lawfully owns what is in his possession. If it is proven otherwise, he should avoid engaging in financial transactions with such a person, but he is not obliged to investigate the matter any further. Shaykhul-Islam Ibn Taymiyyah said, “With regard to property that has been taken under coercion or acquired through invalid contracts, it is incumbent on a Muslim who knows about that to avoid it [such a property]. If I know that a person stole some property, or he betrayed a trust or usurped it and took it from someone by force and unlawfully, then it is not permissible for me to take it from him, whether as a gift or for a payment for a purchase or as payment of wages or as payment of a debt. This wealth is the property of the one who has been wronged. If the person does not know how this man earned his wealth, what is unknown is effectively the same as what is non-existent. The fundamental principle is that whatever is in the possession of the Muslim and he claims to be his is considered his property. As long as I do not know the source of the person's wealth, I should rely on the fundamental principle about it. If this person has actually usurped and unlawfully seized this property, but I do not know that, it is deemed his property [by me]; what is unknown is effectively the same as what is non-existent. However, if this man is known for earning his wealth through unlawful means, the Muslim should refrain from dealing with him out of piety and consciousness of Allaah. As for the person whose wealth is mostly unlawful, the scholars have held different opinions about it. As for the transactions with a Muslim man the source of whose wealth is unknown, there is no doubt about the permissibility of engaging in financial transactions with him as a fundamental rule. If the person refrains from dealing with such a Muslim out of religious prudence, he has committed a religious innovation that has nothing to do with what Allaah has revealed.” [excerpted with slight adaptation from Majmoo‘ Al-Fataawa]
For more benefit, please refer to Fatwa 233188.
Allaah Knows best.