Inflating the price of a property as legal transfer was pending
Question:-
What is the ruling on the following matter?
We are three partners in a property. We own half the property and the other two partners own a 1/4 share each. Three years ago we had a meeting and offered to buy the other two partners out as per their request. After much negotiation, we settled on a price which all parties agreed upon.
The managing agent was asked to draw up the documents and facilitate the sale. We had to sort out fica documents etc. which took longer than expected. In the meantime, the other parties to-date, enjoyed the full rental income. There was no loss to them.
Now, the other partners are saying that they want more money as the value has gone up. Whilst waiting to get paid out, they benefitted with the full rental from the property. They are now demanding more money. We offered them almost R400 000 more on the property. They’re demanding R800 000 more. We took a chance by purchasing the property as we had no idea if the current tenant was going to stay on. If the value of the property went down, the partners would have still demanded the agreed price .
Is it permissible for the other partners to ask for more? What is the Islamic ruling on this?
Answer:-
Based on the information provided, we understand that the sellers offered the property to you at a fixed price (after extensive negotiations) and you accepted to purchase the property at the stipulated price. In other words, the transaction was finalized and concluded, even though the managing agent was still having to draw up the paperwork. A deal is concluded and finalized by one party proposing to purchase or sell an item at a stipulated price, and the other party accepting the proposal. Legal transfer of the property in your name is not necessary for you to be considered as the owner of the property in terms of Shariah.
The moment the transaction was concluded, you (the purchaser) became the owner of the property and the sellers were entitled to their monies from the sale of the property, particularly if the property was sold for cash.
It was incorrect for the sellers to continue receiving rentals from the property as the property no longer belonged to them. All rentals should have been paid directly to you. They will therefore have to pay you all the rentals that they received, since the property was sold. On the other hand, you will be responsible for all expenses pertaining to the property such as municipal bills, rates and taxes, maintenance of the property etc. All risks will also pass over to you after the sale of the property.
You are, therefore, required to pay the sellers the stipulated amount for which the property was sold and they cannot claim any amount over and above the stipulated selling price, even though the price of the property may have escalated. We hope that the above explanation clarifies the matter. However, if the matter is any different to what we have understood and explained above, then we suggest that all parties draw up a joint questionnaire and forward it to us. We will then respond to the query Insha’Allah. Our ruling is based on the information submitted to our Fatwa department.
ALLAH TA’ALA KNOWS BEST!
ANSWERED BY:
Mufti Mohammed Desai
Date: 11 Rabi-ul-Awwal 1444 / 08 October 2022