The ruling on the “conditional sale deed”

Question

Among us the “conditional sale deed” has become a common custom; its reality is the same as that of bayʿ al-wafaʾ, that is, people out of necessity, for money, (sell) all or part of their own land on the condition that when the money is returned — within a period of, for example, ten or eleven years — the land will be returned; and until that time the buyer continually derives benefit from the land. What is to be ascertained is whether this arrangement is permissible or not.

Answer

When land is sold on condition of return, then according to the Shariʿa this is not a sale but a pledge (rahn), and the rulings of pledge will apply to it. The income that the buyer has obtained up to the time of return is not permissible — rather, it is interest: [ar]صورته أن يبيعه العين بألف على أنه إذا رد عليه الثمن رد عليه العين[/ar] “Its form is that he sells him the item…

Source: Fatawa Mahmudiyya

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