Q: A Brand new business was acquired from the landlord 5 years ago. An amount of R400 000 was paid as “key-money” to obtain the

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Question

 

I would like to find out the following:

 

A Brand new business was acquired from the landlord 5 years ago. An amount of R400 000 was paid as “key-money” to obtain the premises. It was also agreed that after 5 years, the business would be valued and 50% of it’s market value must be paid to the land lord as goodwill.

 

Kindly advise if the above transaction is shariah compliant/Jaiz.

 

 

Answer

 

In the name of Allāh, Most Gracious, Most Merciful

Assalāmu ῾alaykum wa Rahmatullāhi Wabarakātuh

 

We understand from your query that you have paid an extra sum of R400 000, 00 to obtain the premises and 5 years later an additional amount should also be given.

If our understanding is correct, it is not permissible to pay an additional amount as “key money” or “goodwill” which is not in lieu of any item or benefit.

As an alternative, the rental may be increased according to the goodwill value.

 

And Allāh Ta῾āla Knows Best
Wassalāmu ῾alaykum 

 

Ml. Rayhaan Docrat,
Student Dārul Iftā

Checked and Approved by:
Mufti Ebrahim Desai
Dārul Iftā, Madrasah In῾āmiyyah

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