Fatwa: # 14997
Category: Business Matters
Country: South Africa
Date: 19th March 2007

Title

Is it permissable to buy a sectoinal title unit " off-plan". ...

Question

Is it permissable to buy  a sectoinal title unit  " off-plan". You are requested to pay a deposit of say  ten or twenty thousand rand and the unit is only ready for occupation in a year's time.

would permissability be affected if the deposit that you pay is  a) refundable  or  b) non refundable in the event that you wish to cancel the deal?

Answer

In the name of Allah, Most Gracious, Most Merciful

Assalaamu `alaykum waRahmatullahi Wabarakatoh

According to Shariah, purchasing a unit “off plan” falls in the category of Istisn’aa (made to order). According to the laws of Istisn’aa, once the constructer has begun work, the client has no right to cancel the deal. If no work has begun, the client has right to cancel the deal and whatever amounts were paid to the constructer will have to be refunded to the client (Shaami Vol.5 Page 225, Islamic Finance Pg 196).  

Therefore, if the constructer has begun the work, he has a right to withold the deposit in lieu of the work he has done. If he did not begin any work, he will have no right to hold the deposit and will have to refund you the money.

If the contract states that in any event (whether the constructer began the work or not), the deposit will be forfeited, the contract will be rendered as invalid according to Shariah.

And Allah knows best

 

Checked and Approved by:

Mufti Ebrahim Desai
Darul Iftaa

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