Presales and Assignment in Islam

Q: I would like to know what can make a pre sale purchase and assignment before ownership halal? In general, the model is some brother pay down payment on a property that is under construction and agree on a purchase price at completion over a year or more, and then by the time its ready before taking ownership they may sell the property (called assignment) without fully owning the property first. As doing this way they can save taxes and fees, which they would have to pay had to first fully purchase the property and pay fees and taxes and then sell that property.


الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب

A: The process of presales and assignment indicated in the question is not sharia compliant. A sale contract requires that the product to be sold exists, is owned by and in the possession of the seller. There are only two exceptions to this of which one that is related more closely to the question is that of a manufacture/construction contract known as ‘istisna’. However, the needs and risk aversion of those that use the process of presales and assignment cannot be met under istisna as the latter requires a definite customer who agrees a price and specifications up front with the manufacturer/constructor for the manufacture/construction of the commodity/property. It is possible for an investor to use the istisna contract as an investment tool by way of a parallel istisna contract. However, this too requires a definite end customer with an agreed price and specifications.

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