Buying land in another's name and then paying deferred price to him
27-12-2017 | IslamWeb
Question:
Assalaamu alaykum! Muslim "A" wanted to buy a piece of land but did not have money, so he asked Muslim "B" to buy that land with his money and then sell it to A on credit. B agreed, but because he lived in another region from A, he asked A to deal with all the documentation on his behalf and in his absence so that first the land would be documented in B's name - thus the land will formally belong to B, and after that he would be able to sell A this land on credit. However, the documentation process took too long and was complicated, and in the first step in that process, A had to make the letter of authority in his own name in order to act legally on behalf of B, and only then put the house in B's name. B managed do to that, but there are still issues now with putting the house in B's name because of bureaucratic procedures in our country. In the meantime, A already started repaying his credit (debt + the agreed sum of addition for credit). So based on the above, considering that the house is still in B's name and the owner of the land has only given documents of authority to A (to sell it etc.) and it is not known yet when B will be able to put the land in A's name, is it permissible for B to accept extra payment (credit) from A? Also, A suggested to give B all the debt first (let's say 10,000) and then give him the additionally agreed-upon 2,000, not in the form of cash, but by helping B to buy a car or the like in order to not fall into interest. Can you please advise the best way forward for A and B in order for them to finalize the agreement on halal terms and not fall into interest?
Answer:
All perfect praise be to Allah, the Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallahu ‘alayhi wa sallam, is His lave and Messenger.
It is not obligatory to register the land under B's name because this is considered a mere legal procedure; it is sufficient to make a real purchase of the land for B, and then when he acquires full ownership of it and takes it into his possession, he may sell it to A for the price which they agree upon. A can then register the land in his name directly from the original seller. B could have purchased the land himself from its owner over the phone, and he can also sell it to A over the phone as well after taking it into his possession.
The "Islamic Fiqh Academy Magazine", issue no. 6, vol. 2, reads, "Contracts conducted over the phone and the like are valid as long as the transaction does not entail the immediate receipt of the purchased without problematic aspects..."
In any case, if B has sold the land to A after buying it and having assumed full ownership of it, then there is no harm in this transaction and the land has become the property of A, and A then has the right to register it under his name directly before it is even registered under B's name.
As for the extra payment (other than the one included in the agreed-upon price) which A wants to pay to B in return for delaying the payment, it is impermissible, even if he cunningly paid it as help in buying a car or the like. This is because an increased amount charged on the principal amount of a debt in return for delaying the repayment is considered Riba (interest). However, there is no harm if he really wants to help B and give him an extra amount at the time of payment without prior agreement or collusion in this regard. Abu Hurayrah, may Allah be pleased with him, narrated that a man came to the Prophet, sallallahu ‘alayhi wa sallam, demanding his debts, and he behaved rudely. The Companions were about to intervene, but the Messenger of Allah, sallallahu ‘alayhi wa sallam, said (to them), "Leave him, for the creditor (i.e. owner of a right) has the right to speak." The Messenger of Allah, sallallahu ‘alayhi wa sallam, then said, "Give him a camel of the same age as that of his." The people said, "O Messenger of Allah! There is only a camel that is older than his." He said, "Give (it to) him, for the best amongst you is he who pays the rights of others handsomely." [Al-Bukhaari and Muslim]
Allah knows best.