Exploiting mortgaged land in exchange for a loan
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The second question of Fatwa No. ( 17939 )
Q2: Two parties agree: the first party is the owner of money (cash),
And the other party: the owner of agricultural land (a farm), on the condition that the owner of the agricultural land takes a sum of money (for example, several thousand) in exchange for giving the owner of the money a limited piece of agricultural land, defined in area and boundaries, as a pledge. The party who owns the money pays rent to the owner of the agricultural land, and he plows it, fertilizes it, irrigates it, and performs all agricultural operations, and takes its fruits and produce. This piece of agricultural land remains in his possession until he recovers his money from its owner, knowing that this is agreed upon by both parties with their consent. I ask you, for the sake of Allah, about the type of this transaction: is it lawful or forbidden? May Allah make you a helper to the Muslims in clarifying and explaining the matters of their religion.
A2: This transaction mentioned is not permissible; because it is a loan that brings benefit, and every loan that brings benefit is usury or interest, and their agreement on it does not make it permissible; because the criterion is the validity of the contract according to the Shari'ah, not their mutual consent and agreement on what is forbidden. 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.
Q2: Two parties agree: the first party is the owner of money (cash),
And the other party: the owner of agricultural land (a farm), on the condition that the owner of the agricultural land takes a sum of money (for example, several thousand) in exchange for giving the owner of the money a limited piece of agricultural land, defined in area and boundaries, as a pledge. The party who owns the money pays rent to the owner of the agricultural land, and he plows it, fertilizes it, irrigates it, and performs all agricultural operations, and takes its fruits and produce. This piece of agricultural land remains in his possession until he recovers his money from its owner, knowing that this is agreed upon by both parties with their consent. I ask you, for the sake of Allah, about the type of this transaction: is it lawful or forbidden? May Allah make you a helper to the Muslims in clarifying and explaining the matters of their religion.
A2: This transaction mentioned is not permissible; because it is a loan that brings benefit, and every loan that brings benefit is usury or interest, and their agreement on it does not make it permissible; because the criterion is the validity of the contract according to the Shari'ah, not their mutual consent and agreement on what is forbidden. 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.