Purchasing something re-possessed by the bank
Assalamu alaykum Mufti, I would appreciate if you could kindly assist with the following:What is the ruling of repossessed items? Is it permissible to purchase re-possessed items from the bank? What is a person already purchased such items? Thanks
Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,
We cannot pass a blanket ruling with regards to purchasing re- possessed items. Many times the bank would not be Islamically justified in re-possessing the item. At times, even if is justified, it would be on condition that the bank returns to the buyer those monies which have already been forwarded for the item.
in Islam, if a business contract is cancelled, the buyer has the right to hold back the purchased item until the money which he has paid for the item is returned to him:
(فله ان يحبس ما اشترى (فتح القدير 6/101(و بعد الفسخ لا يأخذه با ئعه حتى يرد ثمنه المنقود (رد المحتار 5/95
It is quite evident that this is not the case when it comes to re-possessing.
Even if the buyer agreed to the condition that the bank may repossess without returning any money, then too it would not be permissible for them to repossess in this manner. (Aap ke Masaail 6 /154)
Yes if the item was in the hands of the buyer on a rental basis (meaning that the installments paid were in the form of renting that item then there would be no need to return the amount paid already, but it should be borne in mind that merely stating in the contract that ”the buyer will only become the owner after the last installment is paid “ does not constitute an عقد اجارة(rental contract). In fact, even if it is written in the contract that the buyer will only become the owner after the last installment is paid, the condition will have no effect. The contract will be a بيع فاسد ,and once the buyer takes possession of the item he will be the owner. (see Ahsan al-Fataawa, 6/532)
Furthermore, it cannot be argued that the paid amount is not returned because of the value of the item decreasing during the period of it being in the hands of the buyer. If the item really becomes defective, the seller/bank would only be allowed to subtract that amount which decreased in the value of the item due to the defect. (the remainder will have to be returned)
Then again not any and every form of depreciation is considered as a defect as many texts of our illustrious scholars state that an defect is only that which causes a deficiency in the item itself.
النقصان بتراجع السعر غير مضمون على الغاصب اذا كان الرد فى مكان الغصب (مجمع الضمانات 133)
Another dark area is that one cannot always be certain as to how the actual contract took place. Was the bank just a 3rd party financing the deal or did it actually buy the item first? If it bought the item first and then sold it, then were the papers signed before or after the bank purchased the item etc?
Hence to ascertain whether one will Islamically get ownership of a repossessed item when it is being sold to him he will first have to verify the history behind that specific item right down to the minutest detail. Merely reading the contract papers would not shed any light on the matter . Firstly because those papers are more so to secure the interests of each party and bind one another to the terms and conditions therein rather than to discuss the actual nature of the contract and specify what really took place (in absolute detail) in the purchasing of that item. Secondly because the contract itself has many clauses which, when scrutinized (from the Islâmic point of view) totally contradict one another and makes it difficult to declare with certainty what the nature of the contract really is. Therefore our advice is to abstain from purchasing these re-possessed items.
However, fundamentally, if someone bought a re-possessed item (though not advisable) then he would be deemed as the owner of that item, looking at the fact that the reasons for ownership being established are more dominant and overpower the possibility of ownership not being established.
This repossessing could fall under the ruling of اقالة , especially since the buyer is willingly allowing them to re-possess it, or at least he willingly signed the contract.
In fact it is stated in Ahsan al-Fataawa that just being unable to pay for the item gives the buyer the right to cancel the contract. (6/533)
قل العلا مة المرغينانى رحمهالله :لما تعذر استيفاء الثمن من المشترى فات رضى البائع فيسنبد بفسجه (هداية 4/317)
If not اقالة then in aفاسد بيع , both parties ,or the party which has the benefit of the conditions stipulated (in this case the bank) has the right to cancel the deal even though the buyer is unhappy about it.
إن لكل الفسخ بعلم الاخر لا برضاه (رد المحتار 5 /91 )
و مفهومه فى البحر (6 / 93)
Once the item goes back to the sellerbank, no matter how it is given back, the contract will be cancelled and ownership of the sellerbank will be established on that item.
Another angle is that the bank and the dealer, both could be acting as representatives وكيل of one another in selling the item, and in re-possessing it, so it wouldn’t cause any harm if the re-possessor is not the actual seller, for he would in that case be the وكيل of the seller. Finally, if the dealer is actually selling the item to the bank ,and Islamically, ownership of the buyer is not yet established on that item, then the one who buys it after it being re-possessed will get ownership of that item.
In conclusion, when looked at from different angles it appears that the item does go into the ownership of the re-possessor, even though he may be wrong in not returning the already paid monies to the buyer. Therefore one who buys that item will get ownership of it. On the basis of Taqwa however, one would be better off not buying repossessed items (as elaborated in the earlier part of this discussion).