Q. I am a middleman in a property transaction, i.e. I am able to get hold of a property cheap because the owner is in financial difficulty and is struggling to pay the mortgage, which would be either capital re-payment or interest only and he wants to get rid of it. If I decide to take the property off him but rather than getting/buying the property myself, I sell this lead to another person/investor say for £5k is this ok to do?
If this is possible to do then what happens if that person gets a mortgage after I’ve sold the lead to him? Am I answerable if he got out a mortgage or is that nothing to do with me?
I am going to send you 2 examples of what I mean in relation to this question: After reading this example which means I am controlling the property only I will not own it immediately but it will have a option to buy in the future. This means that the property will have no mortgage or if it does it won’t be in my name it will be in the seller’s name. However I will agree to take over his mortgage payments but I will get tenants in who will pay his mortgage and I will take my cut i.e. the difference between the mortgage payment and the rental payment will be my profit.
So my question is: Can I pay someone else’s mortgage be it capital payment or interest only in case they miss a payment or they ask me to pay for it because they are struggling themselves that month. It’s the same as if a family member could not pay off the loan or mortgage and asked me to give them some money to help them out for a month or so.
If I did pay it, is it not possible to then at the end of the year work out what interest I have paid and take this out as interest money to give away?
If you can also suggest what is permissible within property transactions I would be most grateful.
A. If, in getting access to the property, you have rendered services which make it easy for the prospective buyer/investor, then you can charge for your services. However, if you did not do anything except to inform another person of the sale/deal of a certain property, then it would not be permissible to claim a stipend since you did not do any services. A lead is not a tangible asset and cannot become an item of sale. This is unlike being a Real estate agent where you are officially hired by a person to work for him in selling or buying house/land/property etc.
With respect to the explanation you have given in the other paragraph, it is clear to me that acting as a middleman as you have mentioned, is not in accordance to the teachings of the Shariah.
In the situation you have described, there is a sort of deception that takes place. First of all, seeing that you are not the owner of the building, it means that you are not entitled to collect a rent for the property. As such, your act of collecting the rent means that you are doing so on behalf of the owner (who may be the seller). In this case, you are simply a representative of the real owner. As a representative, you are required to give him the total sum collected and then he may wish to pay you a salary for the services that you are performing.
In this situation, there must be a clear understanding between the tenants and the owner (seller) that you are in charge of collecting funds on behalf of the owner. Acting as a middleman in this case, will be permissible, and you will be seen as a worker/representative of the owner/seller. It will therefore be compulsory upon you to hand over the total sum collected from the tenants and give it to the owner. Upon this, he will then pay you a salary/wage/stipend for your services.
If the above does not take place, it means that you are assuming the role of a tenant to the owner, and at the same time, you are assuming the role of the owner to the tenants, which you know to be far from the truth.
The question that arises here is whether the tenants and owner are pleased with this or not? If the tenants know that the cost of the rental is in reality less than what they are paying, then they will most certainly like to deal directly with the owner. And if the owner knows that his property can fetch a larger sum in rental, then he will prefer to deal directly with the tenants so that he can get sufficient to pay the mortgage as well as a little addition to live on. He, as the owner, has a right to this extra amount since the monies are paid against the benefits of renting the property. But, as the middle man, you have no justifiable reason for charging an addition to the stipulated mortgage amount since you are not the owner of the property. He alone has the authority to fix a certain figure, except if he has hired you as the manager of his affairs and has given you the authority to fix a price with the tenants.
So, based on my understanding of the Shariah guidelines on this issue, acting as a middleman in the way you have described is not permissible.
The way I have described, being a manager or a worker for the owner of the property and then collecting a wage/salary for this, is permissible.
And Allah knows best.
Mufti Waseem Khan