Bay' al-Wafa’

Literally: loyalty (al-wafa') is the antonym of treachery. Technically: when a person in need of cash sells real estate or an asset on the condition that the seller be allowed to get the commodity back upon paying its price. It is also called a trust sale (bay' al-amanah), and the Shafi'is called it a returned mortgage (al-rahn almu'ad). Other names for it are permissible sale (al-bay' al-ja'iz), transactional sale (bay' al-mu'amalah), the sale of obedience (bay' al-ta'ah). Bay' al-wafa' is a defective sale according to the Malikis and Hanbalis and the early Hanafi and Shafi'i scholars. Some of the later Hanafi and Shafi'i scholars consider it permissible, and some said that it is, in fact, rahn (pawning) and takes its attendant rulings. The Islamic Fiqh Academy of the OIC issued a resolution declaring that the reality of this sale is that it is “a loan with added benefits”, so it is a ruse to circumvent the prohibition of riba. It is invalid according to the majority of the jurists; thus, it remains a prohibited contract. For further details see ISRA Compendium.


RESOLUTION No. 66/4/7: BAY'AL-WAFA (DEBT GUARANTEE SALE)
A Sale and Buyback Deal on Real Estate
What Is the Ruling on the Islamic Lease Sukuk for the Government of Bahrain?
Is it Allowed to invest in projects that include loopholes related to bay’ al wafa’ (sale with the right of repossession)?
Is it allowed to buy petroleum equipment from the producer and sell it by murabahah to the client along with a guarantee by the producer?

Islamic Financial System ©

 

 


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