Exploiting a pledge in exchange for a loan
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The second question of Fatwa No. ( 17393 )
Q2: In some villages in Egypt , the custom of pledging agricultural land is widespread. A man who needs money takes money from a man who has money, and in exchange for taking the money, the owner of the money takes the agricultural land, which is the property of the debtor, as a pledge. The owner of the money takes the land and benefits from its fruits and what the land yields, and the owner of the
land takes nothing from the land, and the agricultural land remains under the control of the creditor until the debtor pays the money to its owner. What is the ruling on pledging agricultural land, and is taking what the land yields lawful or forbidden?
A2: One who lends a loan is not permitted to stipulate a benefit for himself in exchange for the loan; for it was narrated from the Prophet (peace and blessings be upon him) that he said: , and the scholars have agreed upon this. Included in this is what was mentioned in the question regarding the borrower pledging the land to the lender and his benefiting from it until the repayment of the loan he has on the owner of the land. Likewise, if he had a debt on him, it is not permissible for the owner of the debt to take the yield of the land or benefit from it in exchange for giving the debtor time, because the purpose of the pledge is to secure the realization of the loan or debt, not to exploit the pledge in exchange for the loan or to neglect in repaying the debt. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q2: In some villages in Egypt , the custom of pledging agricultural land is widespread. A man who needs money takes money from a man who has money, and in exchange for taking the money, the owner of the money takes the agricultural land, which is the property of the debtor, as a pledge. The owner of the money takes the land and benefits from its fruits and what the land yields, and the owner of the
land takes nothing from the land, and the agricultural land remains under the control of the creditor until the debtor pays the money to its owner. What is the ruling on pledging agricultural land, and is taking what the land yields lawful or forbidden?
A2: One who lends a loan is not permitted to stipulate a benefit for himself in exchange for the loan; for it was narrated from the Prophet (peace and blessings be upon him) that he said:
Every loan that brings a benefit is riba
كل قرض جر نفعًا فهو ربًا
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.