Buying land and selling it before paying its price in full
Fatwa No: 365242

  • Fatwa Date:3-1-2018 - Rabee' Al-Aakhir 16, 1439
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Question

Assalaamu alaykum. I have entered into an agreement with a person to buy a piece of land from him and have paid an amount in advance. The remaining amount will be paid on a certain date and then the land will be registered in my name. Now another person has approached me to sell the land to him for a greater price so that on the day of registration, the land would be registered in his name instead of mine. The former owner of the land would get the amount, as mentioned in the agreement, and the difference would be the profit gained by me. All these things will be carried out with the knowledge of the land owner. Is this transaction allowed in Islam?

Answer

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, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.

You stated that you entered into an agreement with a person to buy a piece of land from him. If what is meant is that the sale contract and transfer of ownership will not be completed except after paying the price in full, then you do not have the right to sell the land before you have full ownership of it. The Prophet, sallallaahu ‘alayhi wa sallam, said, "Do not sell what you do not have." [Abu Daawood and others] Even if you had already concluded the sale contract but you have not acquired full ownership of it until you pay the price in full, it is invalid for you to sell the land because it is invalid to make a pending sale.

However, if you mean that you have bought the land and acquired full ownership of it but it has not been officially registered in your name because the seller still has the title and will give it to you after paying the remaining portion of the price and he has given his consent to you to sell it, then there is nothing wrong with that.

Accordingly, the ruling depends on the nature of the transaction concluded between you and the owner of the land. If you had already bought the land and acquired full ownership of it but he held the deed as a guarantee until you pay the full price and agreed that you sell it, there is no problem with that. However, if you had not acquired ownership of it and will do so after paying the full price, it is invalid to sell it now because it is forbidden to sell what the person does not actually own and cannot deliver. It is better to consult a scholar directly so that he could ask you about further details regarding the nature of the contract and the relevant issues.

Allah knows best.

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