At Crestmount Money, we are committed to adhering to the Sharia compliant principles as outlined by Mufti Muhammad Taqi Usmani. Our financial solutions are designed to ensure that all transactions are conducted in a manner that aligns with Islamic finance, promoting ethical and fair financial practices.

1. Definition and Nature

Understanding Ijarah

Ijarah means “to give something on rent.” It involves transferring the usufruct (right to use) of an asset to another person for an agreed period and consideration.

2. Ownership and Usufruct

Roles of Lessor and Lessee

The lessor (owner/financier) retains ownership of the asset, while the lessee (user) gains the right to use it.

The asset must have a valuable use and cannot be consumed during its use (e.g., money, food).

3. Liabilities and Responsibilities

Agreements and Customs

Generally, the lessor bears all liabilities related to ownership (e.g., land tax) and the lessee is responsible for liabilities related to the use of the asset (e.g. water, electricity, gas utilities).

Alternatively, the lessee bears all the liabilities of the taxes and utilities for a reduced rental.

4. Compensation and Risk

Agreements and Customs

Generally, the lessee must compensate the lessor for any damage caused by misuse or negligence and the lessor bears the risk of loss or damage due to factors beyond the lessee’s control.

Alternatively, the lessee bears all the risks for a reduced rental and obtains all the benefits of market appreciation of the property.

5. Lease Period and Terms

Clear Definitions

The lease period must be clearly defined.

The lessee can only use the asset for the specified purpose in the lease agreement.

6. Rental Determination

Agreed Benchmarks

Rent must be agreed upon at the time of the contract and can vary for different phases based upon an agreed benchmark.

The lessor cannot unilaterally increase the rent.

The rent is an all inclusive payment that includes the cost and profit of the lessor.

7. Commencement and Termination

Lease Lifecycle

The lease starts when the asset is delivered to the lessee.

The lease terminates if the asset loses its function and cannot be repaired.

8. Sub-Lease and Assignment

Permissions and Transfers

Sub-leasing is allowed with the lessor’s permission.

The lessor can sell the leased property, transferring the lease to the new owner.

9. Prohibition of Riba (Interest)

Interest-Free Rentals

Any form of interest (riba) is prohibited. Rent must not be linked to interest rates.

10. Charity for Late Payment

Ethical Penalties

Penalties for late rent payments, beyond the costs incurred by the lessor, should go to charity, not to the lessor’s net income.