Fatwa number: 1201

Category: Fatwas about Monetary Transactions.

The ruling concerning earnest money in selling

Question:

Our Sheikh –may Allah give you the perfect reward – what is the ruling regarding the selling that contains earnest money? And may Allah reward you well.

Answer:

All praise is due to Allah, the Lord of the Worlds. Peace and blessing be upon whom Allah sent as a mercy to the Worlds, upon his Family, his Companions and his Brothers until the Day of Resurrection. This being so said:

The form of earnest money selling is that: a man purchases a merchandise where he pays the seller an amount of money at that place –declaring thereby his intention in purchasing it– in a way that if they accomplish the transaction the paid money will be included in the price of the merchandise, that is to say: it represents a portion of its full price, and if the transaction is not accomplished, the buyer leaves that money for the seller and does not ask for it. This having been said, scholars have differed on the permissibility of this deal in two opinions:

·     The first opinion: says that selling with earnest money is impermissible, and likewise said the majority of scholars, and it is the opinion of Al-Imâm Mâlik and Ash-Shâfi‘î and the People of Opinion (Hanafi School of jurisprudence) and Abû Al-Khattâb from the Hanbali School, and this is also narrated from Ibn ‘Abbâs رضي الله عنهما and Al-Haşan رحمه الله (1), and they took as an evidence for its impermissibility the hadith of ‘Amr Ibn Shu‘ayb, on the authority of his father, that his grandfather said: “The Messenger of Allah–صلّى الله عليه وسلّم– forbade the type of transactions in which earnest money was paid” (2), and this hadith was reported from several chains of narration strengthening one another. In this hadith there is a clear indication that earnest money is prohibited, and the reason of forbidding it is that: it contains hazard and an erroneous stipulation and devouring people’s wealth unjustly, because the buyer does not take anything in exchange for what he paid, and thereby the seller would take what he does not deserve, that is to say: the stipulation that what he paid him would be for free if he chose to leave the merchandise is an erroneous stipulation. And because the hadith of ‘Amr Ibn Shu‘ab implies restriction, which has the preponderance over the permissibility, as settled in the principles [of Jurisprudence] (3).

·     The second opinion: says that earnest money selling is permissible, and likewise said Ahmad and Ibn Sîrîne and Sa‘îd Ibn Al-Musayyib –رحمهم الله–, and it is narrated from ‘Umar Ibn Al-Khattâb and his son–رضي الله عنهما–.

What appears to me is that earnest money selling is permissible for the following evidences:

-         The weakness of ‘Amr Ibn Shu‘ayb’s hadith, for it is judged Da‘îf (weak) by Ahmad (4) and others (5), and a weak hadith cannot be taken as an argument.

-         Basically, trades and all types of earning and benefits are allowed and permissible, and this basis should not be refrained from unless by providing an evidence of prohibition, and this evidence of prohibition –as aforementioned– has a false chain of narrators and we cannot not depend upon it in rulings.

-         It is the opinion of the Companions, since: “Nâfi‘ Ibn ‘Abd Al-Hârith bought a house for imprisoning in Makkah from Safwân Ibn Umayyah provided that if ‘Umar accepts then it will be for him, and if he refuses, then Safwân will have a four-hundred dinars,” ⁽⁶⁾ and they all are Companions–رضي الله عنهم–, and it was also allowed by Ibn ‘Umar–رضي الله عنهما– (7).

-         Earnest money Selling includes a pledge of compensating the seller for suspending him and causing him to wait, which might cause him to miss other deals because of this one, which is the same as causing a divorced woman to miss the chances of marriage before the consummation, for she deserves the half of the dowry if he had set a dowry for her, or enjoyment (a sum of money) if he had not set for her anything, as a compensation for her suspension and causing her to miss the chance of marriage.

This being so said, whereas–in my opinion–the permissibility of earnest money has the preponderance, yet it would be better if the seller returns the money if the buyer refrains from buying, out of benevolent moral comportment, which would strengthen the brotherhood in faith, taking into account the hadith of the Prophet–صلّى الله عليه وسلّم–: “May Allah's mercy be upon him who is lenient in his buying, in his selling, and in asking his money back.” (8)

The perfect knowledge belongs to Allah عزَّ وجلَّ; and our last prayer is all the praises and thanks are to Allah, the Lord of the Worlds, and prayers of Allah are to Muhammad and his Family, Companions and Brothers until the Day of Resurrection.

Algiers on 15 Rabî‘ Al-Awwal 1439 H.

Corresponding to 03 December 2017 G.