Sale of a Pledged Item
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Fatwa No. ( 15630 )
Q: I inform you that there is a person who owes me a sum of ten thousand riyals (10,000 riyals) on a deferred basis, and he did not pay me my right when the time came. He offered me a piece of real estate and asked me to take it for the amount mentioned above. He stated that he had previously applied to the Real Estate Development Fund for a loan on the aforementioned land. He accepted this land and stipulated that the loan would be attached to the land in his name until he received it from the bank, and then he would transfer it to my name. The seller accepted this. We wrote an agreement between us, a copy of which is attached. Please inform us whether it is permissible for the loan to be received in the seller's name and then transferred to my name after he receives it, and for me to pay off the bank? May Allah reward you with good, and peace be upon you and Allah's mercy and blessings.
A: This contract is not valid for two reasons: First: The land has become pledged to the bank for the loan debt, and a pledge is not permissible to be sold except with the consent of the pledgee. Second: The debt binds the debtor and does not transfer from his liability to the liability of another except in the case of assignment (hawalah), and this is not such a case. And Allah knows best. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: I inform you that there is a person who owes me a sum of ten thousand riyals (10,000 riyals) on a deferred basis, and he did not pay me my right when the time came. He offered me a piece of real estate and asked me to take it for the amount mentioned above. He stated that he had previously applied to the Real Estate Development Fund for a loan on the aforementioned land. He accepted this land and stipulated that the loan would be attached to the land in his name until he received it from the bank, and then he would transfer it to my name. The seller accepted this. We wrote an agreement between us, a copy of which is attached. Please inform us whether it is permissible for the loan to be received in the seller's name and then transferred to my name after he receives it, and for me to pay off the bank? May Allah reward you with good, and peace be upon you and Allah's mercy and blessings.
A: This contract is not valid for two reasons: First: The land has become pledged to the bank for the loan debt, and a pledge is not permissible to be sold except with the consent of the pledgee. Second: The debt binds the debtor and does not transfer from his liability to the liability of another except in the case of assignment (hawalah), and this is not such a case. And Allah knows best. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.