Assalam Alekum. I have done an agreement for sale of property with a person and got X amount as advance payment. Remaining have to paid within 3 months. There was a clause in agreement that if buyer is unable to pay remaining amount or backs off from deal, I will keep the advance payment as penalty. (There was another clause for seller also if he backs off, he will give double of advance taken to buyer). Now the buyer is backing off and want to cancel the deal due to unavailability of remaining payment. Is the penalty amount of advance payment is halal for me to keep?

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

If the sale contract takes place between the seller and the buyer, and the seller takes an amount of money from the buyer on the basis that if the buyer proceeds with the sale, it is part of the price, and if he does not proceed, then it belongs to the seller. This is known as the down payment sale, and the scholars differed in opinion on its ruling.

The majority of jurists ruled the prohibition of the advance payment unlike the scholars of the Hanbali School of jurisprudence who are of the view that it is permissible. A group of contemporary scholars chose this opinion, which is also the decision of the Islamic Fiqh Academy.

Accordingly, you may take this amount of money if it is agreed upon between you and the buyer.

Allah knows best.