Withholding the Product (as a Collateral) for its Price

প্রশ্ন · Question

Assalamu Alaikum Wa Rahmatullah Wa Barakatuhu,
I would like to enquire about the following type of purchase: “Buying a
car with a portion of its price, the rest of the payment is done as
personal cheques, but the seller refuses to give up the car except after
he receives the payment of the final cheque.” Is this considered halal
or not? May Allah reward you.

উত্তর · Answer

It is not permissible for the seller to withhold the house after selling it
as a debt, because this falls under: “Withholding the Product (as a
Collateral) for its Price”, and there is dispute among the scholars over
this. Some of them allow it under certain conditions, others do not
allow it, and others allow it in some circumstances while disallowing it
in other circumstances, etc. I outweigh the opinion of impermissibility
because once the car or house is sold, whether through debt or
installments, it be comes owned by the buyer and he/she has the right
to do with it as they like, selling or renting or using it, like living in it or
renting it to someone, etc. Thus it is permissible for the seller in this
case to withhold the product until the buyer (through debt) pays its full
price, or to withhold something else other than the car that he sold to
him, like withholding a piece of gold as a pledge, etc. and it stays with
the seller until the buyer pays back the whole amount agreed upon,
then the pledge is returned to the buyer, etc. It has been narrated that
the Messenger of Allah ﷺ :
«اشي ى رسول الله من يهودي طعاماً بنسيئة فأعطاه درعاً له رهنا » “Bought some
food from a Jew on credit, and he gave him a shield of his as a pledge.”

(Reported by Muslim on the authority of A’isha (ra)) Or, if the time
limit for paying the full price is over, and the indebted refuses to pay or
couldn’t do so, then the pledge is sold, and the seller takes the amount
left of the debt, and returns whatever amount is left to the indebted,
that is because the pledge belongs to its owner according to the
hadith: 'The pledge given as security is not forfeited.' (Related by
Shafi’i from Sa’id ibn Al -Musayyib) i.e. if the pledge’s price was greater
than the debt’s amount, it is returned to the owner.
As for the seller pledging the item as a debt or an installment, then this
is not permissible, because the sale by debt or installment is a
complete sale, in which the buyer becomes the full owner of the item
he buys, as long as the sale has been held in debt or in installments, for
example, every year or less or more according to the agreement. If the
bought item is pledged, then this is considered injustice to the buyer
and an assault on his ownership, because selling by debt or by
installments is a complete right sale making the buyer the owner of the
item and makes use of it as he wishes, and after the sale contract is
completed, it is not permissible for the seller to pledge the item,
because this prevents the buyer from use of his ownership of his
bought item.
We had previously given a detailed answer to a question on the same
topic on 24/5/2015, which I provide you with for your benefit:
This issue is known in Fiqh as “Withholding the Product (as a Collateral)
for its Price” i.e. that the product to be sold will be kept as a security
with the seller until the buyer pays its price. This situation does not
arise if the seller and buyer were of the character that the Prophet ﷺ
described in the Hadeeth extracted by Bukhari on the authority of Jabir
Ibn Abdullah (ra): «رَحِمَ اللَّهُ رَجُلًَ سَمْحًا إِذَا بَاعَ، وَإِذَا اشْي ََى، وَإِذَا اقْتَض َ » “Allah’s
mercy is on the well mannered man when he sells, buys, and take a
loan”.

Whereas sometimes they differ around receiving the product first or
payment first, and the seller might withhold the product as collateral
until he receives its price, thus giving rise to this situation. The Fuqaha
differed regarding this issue, some permit it on conditions, and other
say it is prohibited, and there are some who permit it in some cases
and prohibit it in others... and so on.
After studying this issue my view is inclined towards the following:
First: Type of product
1. That the product is measurable, weighed, or planted...etc. like the
sale of rice, cotton, textiles...etc.
2. That the product is not measurable, weighed...etc. like selling of a
car, house, or animal...etc.
Second: Sales Price
1. Up-front i.e. in cash, like buying a product for ten thousand in cash
up front.
2. Deferred payment for a given period, like buying the product for ten
thousand but is paid after a year.
3. That some of the payment is paid up -front and the other part is
deferred, like buying the product with the first payment of five
thousand, and the other five is paid after a year for example, or is paid
in monthly installments.
Third: The Shariah ruling differs according to how the above matters
differ:
The first case: The product is not measurable and not weighted... such
as the selling of the house or a car or an animal:
1. The up -front payment, like buying a car for ten thousand in cash,
and that it is documented in the contract.

In this case, the seller may withhold the product, which remains with
him as a collateral until the up -front payment is made according to the
contract. The evidence for this is the Hadeeth narrated by Tirmidhi
which is classified a Hasan Hadeeth. On the authority of Abi Umamah,
he said: I heard the Prophet ﷺ say in the sermon in the Farewell
Pilgrimage: «العَارِيَةُ مُؤَدَّاةٌ، وَالزَّعِيمُ غَارِمٌ، وَالدَّيْنُ مَقْض ِي » “What is borrowed is
rendered, and the guarantor is responsible, the debt is paid.”
Za’eem: guarantor, Garim: liable, and the evidence is in his ﷺ saying:
«وَالدَّيْنُ مَقْض ِي » “the debt is paid”. If the buyer receives the product prior
to paying the cost, it is buying on loan. And «وَالدَّيْنُ مَقْض ِي » “the debt is
paid” i.e. the priority is to pay the debt as long as long as the purchase
is in cash, in other words to pay the price first as long as the price in
the contract must be in cash up front. Al-Kasaani says in Bada’i As-San’i
commenting on the Hadeeth (his saying (peace be upon him) «وَالدَّيْنُ
مَقْض ِيّ »“the debt is paid”. The Prophet (peace be upon him) described
the debt of being paid in general or Mutlaq, if the payment is delayed
for the delivery of the product then this debt is not paid). This is
contrary to the text.
Thus it is permissible for the seller to withhold the product until the
buyer pays its price, and so there will be no debt, and this is in
agreement with the contract because the sale was not by debt but in
cash.
2. The price is deferred, in the case of buying a car with ten thousand
which is paid after one year; in this case it is not permitted to withhold
the merchandise until the completion of the payment of the price
because the price is deferred in the contract by the seller’s approval.
He is not permitted to withhold the product to ensure the price
payment as long as he had sold it for a deferred price, so he annulled
his right to withholding the product, and therefore it is not permissible
for him to withhold the product, but should deliver it to the buyer.

3. The price can be both up-front and deferred, like buying the car with
the first five thousand paid off in cash, and the other five thousand
paid after one year at once, or paid later in installments.
In this case it is allowed for the buyer to withhold the product until the
up-front payment is received, after which he is not permitted to
withhold the product, because of the completion of the deferred
payment, this is for what we mentioned in the points 1 and 2.
In conclusion, it is permitted for the seller to withhold the product for
the up-front price payment, i.e. if in the contract it stipulates that the
payment is up -front and immediate, it is permitted for the seller to
withhold the product until the buyer pays off the up -front cost
payment according to the contract.
It is incorrect to ask how the buyer will withhold his product before
receiving it, i.e. before he owns it. This is because to hold a product as
collateral (Rahn) is not allowed except if it is allowed to be sold. Since
the product bought is not allowed to be sold except after receiving it
according to the Hadeeth of the Prophet ﷺ narrated by Al -Bayhaqi,
from Ibn Abbas who said: The Prophet ﷺ said to I’taab Bin Usaid:
«ي قد بعثتك إلَ أهل الله، وأهل مكة فانههم عن بيع ما لم يقبضوا
إب »
“I have sent you to the people of Allah, and the people of Makkah,
forbid them from selling that which they did not receive”
And the Hadeeth that was narrated by At -Tabarani from Hakeem Bin
Hizam that he said: O Messenger of Allah I sell using various
transactions, which is permissible for me and which is prohibited? He
ﷺ said: «لََ تَبِيعَنَّ مَا لَمْ تَقْبِضْ » “Do not sell that which you do not
receive”.
These Hadeeths clearly state the prohibition of selling that which is not
received, how is it then that the product is kept as collateral before it is
received?

This is incorrect because these two Hadeeths are for the products
which are measured and weighed... but if the product is other than
that like a house or an animal, then it is allowed to sell it before
receiving it based on the Hadeeth of the Prophet of Allah ﷺ narrated
by Bukhari from Ibn Umar (ra), he said,
مَامَ القَوْمِ، فَيَْ ْجُرُهُ عُمَرُ وَيَرُدُّهُ،
َ
فَكُنْتُ عَلََ بَكْرٍ صَعْبٍ لِعُمَرَ، فَكَانَ يَغْلِبُن ِي، فَيَتَقَدَّمُ أ ثُمَّ
يَتَقَدَّمُ، فَيَْ ْجُرُهُ عُمَرُ وَيَرُدُّهُ، فَقَالَ النَّنِْيُّ صلَ الله عليه وسلم لِعُمَرَ
يَا رَسُولَ اللَّهِ، قَالَ
الله عليه وسلم»
“We were travelling with the Prophet ﷺI was riding a rebellious
camal’s calf that belonged to Omar, I could not control it, it would
precede the lines of, then Omar would yell at it and push it back, this
was repeated, then the Prophet ﷺ said to Omar: “Sell it to me”. So
Omar said, “It is yours O Prophet of Allah,” then I said to the Prophet
ﷺSell it to me” so he ﷺ did. The Prophet ﷺ said, “It is yours O
Abdullah Ibn Omar, do what you please with it”.
This action in the merchandise was as a gift before receiving it, which
shows the full ownership of the product before receiving it, and shows
that selling it is permitted because it was owned by its seller.
Hence it is allowed to hold a product as a collateral before receiving it
(cost payment), as long as it is allowed to be sold before receiving it,
but this is only if the product is non -measurable or weighed like a
house, a car, an animal, and so on. In case of conducting a purchase
contract of up -front payment or there is a sum of advanced payment,
then it is allowed to withhold the product as a collateral until receiving
the price, until the up -front payment or the lump sum of the up -front
payment is paid.
The Second Situation: the product is from the measurable and weighed
category, like buying amounts of rice, cotton, or textiles, in this
situation, it is prohibited to withhold the product for its price,

whatever the nature of the payment of the price may be: up -front or
postponed, or deferred payment in a lump sum or in installments:
If the price is up -front payment, it is prohibited to withhold the
product as we explained above.
If the price should be paid in advance, it is not allowed to withhold the
product, i.e. to hold it as collateral, because it is not allowed to hold
the measured or weighed products as a security before receiving the
price, according to the above -mentioned Hadeeth of the Prophet ﷺ .
In the case of the up -front payment, the buyer has to deal with it in
two ways:
Either to sell the goods in advanced payment and give it to the buyer
and have patience with the buyer, whether he gives the price in
advance or after a while without holding the goods as a collateral... or
not to sell the goods, i.e. without any collateral for the merchandise.
Thus if the measurable or weighed products are sold for the up -front
payment or deferred payment, it is not permitted for the seller to
withhold the goods as a collateral with him until the payment of the
price.
This is what I think is most preponderant and Allah Knows Best and is
Most Wise.
Your brother,
Abu Yasin