Ijarah Muntahia Bittamleek. 1 definition. Ijarah Muntahia Bittamleek. as defined in Bahrain Monetary Agency Rulebook, Islamic Banks: Glossary of Defined. Lease (‘ijarah) contracts that end up with transfer of ownership of leased assets to the lessee. It can take one of the following forms: (i) A contract tha. Shari’ah Standard No. (9): Ijarah and Ijarah Muntahia Bittamleek Statement of the Standard 1. Scope of the Standard This standard covers operating leases.

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If the property is sub-leased after the co-owners having owned the usufruct each co-owner is entitled to a share in the sub-lease rental pro rata to his share in the usufruct. Ijarah and Bityamleek Muntahia Bittamleek between the date specified in the contract and the date of actual delivery, and the rental should be reduced accordingly, unless it is agreed that the lease be extended by an equivalent period after its original expiry date. Thus, if the customer, in case of Ijarah associated with a promise to transfer ownership, breaches his promise, the promisor shall be charged either the difference between the cost of the asset intended to be leased and the total lease rentals for the asset which is leased on the basis of Ijarah Muntahia Bittamleek to a third party, or, in case of operating Ijarah, the promisor breaching bittajleek promise shall be charged the difference between the cost of acquisition and the total selling price if sold to a third party by the Institution promisee.

Ijarah and Ijarah Muntahia Bittamleek have not yet been paid become a debt owed to the lessor by the lessee, and therefore cannot be increased. The lease then continues with the rental based on the prevailing market value.

In this case, the rental specified as receivable by the Institution should only be in proportion to its share in the ownership of the asset, since the lessee is a co-owner of the asset and therefore has to pay rent only on the share that he bittam,eek not own.

The lessee will not be held liable for any damage or destruction of the leased asset unless such damage or destruction is a result of misconduct or negligence on the part of the lessee. If it is not possible to provide a substitute asset, the contract will be terminated.


None of these rules should be breached under the pretext that the leased asset was bought by the lessor on the basis of a promise by the lessee that he would acquire it or that ownership of it would devolve upon him, or that he would pay rentals in excess of those payable in respect of a similar property which are similar in amount to the instalments of an instalment sale, or that local laws and conventional banking practices consider such a transaction as an instalment sale with a deferred transfer of the ownership.


The Ijarah shall continue for the remaining time of the contract. However, the heirs of the lessee may terminate the Ijarah contract if they can prove that the contract has become, as a result of the death of their legator, too onerous for their resources and in excess of their needs. Malaysia Economic Census – Environmental Compliance.

It is then permissible that the rentals for subsequent periods be determined according to a certain benchmark. The period of Ijarah should commence on the date of execution of the contract, unless the two parties agree on a specified future commencement date, resulting in a future Ijarah, that is, an Ijarah contract to be executed at a future date.

In all these cases, the separate document evidencing a promise of gift, promise of sale or a promise of gift contingent on a particular event, should be independent of the contract of Ijarah Muntahia Bittamleek and cannot be taken as an integral part of the contract of Ijarah.

Ijarah and Ijarah Muntahia Bittamleek of rental for previous periods, and not all rental instalments, including instalments which have not yet fallen due and in respect of periods for which the lessee has not had the benefit of the leased asset.

In this case, an agreement is reached to make the described asset available during the duration of muntaiha contract, giving the lessor the opportunity to acquire or to produce it. However, if the asset is made available only after a period longer than what customary practices deem proper, then no payment shall be obligatory.

See our Cookie Policy. It is permissible to agree with the customer, upon the execution of the contract of lease, that this amount shall be treated as an advance payment of the instalments of the lease rental.

This period must be long enough so that the leased property or its value could have changed.

Any stipulated upfront rental or accelerated -because of delay of payment- rental is subject to settlement at the end of the Ijarah period or, if the Ijarah contract is terminated earlier, at the time of such termination. This benchmark should be subject to a ceiling, on both maximum and minimum levels. Login Sign Up Toggle navigation. The lessor may take this into account implicitly when the lease rental is to be fixed. However, it is permissible to have a master agreement drawn up coveringa number of Ijarah transactions between the Institution and the customer, setting out the general terms and conditions of muhtahia between the two parties.

For example, it is not permissible, if the first rental is one hundred dinars payable on a spot basis, for the lessee to sublet it to the lessor for one hundred and ten dinars payable on a deferred basis, or if the first rental is one hundred and ten dinars payable on a deferred basis, for the second to be for one ijarsh dinars payable instantly, or if the two rentals are of the same amount, but the payment of the first rental is deferred for one month and the second rental is deferred for two months.


Islamic Finance | Types of Ijarah Muntahia Bittamleek

By IM Research 9 months ago. Termination is also possible when one party secures an option to terminate the contract in which case the party who holds the option may exercise it during the specified period.

The lessor may take out permissible insurance bittaleek it whenever possible, and such insurance expenses must be borne by the lessor.

Scope of the Standard This standard covers operating leases of properties or Ijarah Muntahia Bittamleek, whether the Institution is the lessor or the lessee. By using this site, you agree to this use. That is, the difference between the prevailing rate of rental and the rental specified in the contract must be refunded to the lessee if the latter rental is higher than the former.

In this bittakleek the lessee may benefit from the leased share in the same way in which the lessor used to benefit from it, i.

Such benchmark must be based on a clear formula which is not subject to dispute, because it becomes the determining factor for the rentals of the remaining periods. The excess of the second bitgamleek of the rental shall be treated as an advance to the lessor on account, while the lessor shall bittxmleek any shortage.

In this case, he is obliged to replace the asset if it is replaceable; otherwise, he is liable for the amount of the damage to be determined by valuation.

However, he may not, after the contract is signed, charge the lessee any cost in excess of the cost anticipated at the time of fixing the rent.

An Ijarah may be renewed for another term, and such renewal may be made before the expiry of the original term or automatically by adding a provision in the new contract for such renewal when the new term starts, unless either party serves a notice on the other of its desire not to renew the contract. Ijarah and Ijarah Muntahia Bittamleek damage to the leased asset by misuse through misconduct or negligence.