QA-ID-0007
QUESTION
Someone invests 10k along with a pool of investors to purchase a property, with the intention of flipping it a year later and making a guaranteed 1k profit/10%. Irrespective of whether it made a loss or greater profit. Is this permissible?
ANSWER
﷽
This type of partnership is not permissible or acceptable as a valid partnership. The guarantee of making a 10% profit irrespective of the loss or greater profit is not permissible. Valid partnerships require sharing in the profit and losses. Sharing only in the profit or having a fixed amount irrespective of the losses is not permissible or valid. Such partnerships are not valid as any of the 2 types of shirkat (Islamic partnerships) or mudārabah (sleeping partnerships).
In such a case, the £10,000 given is not an investment, but a loan. The £1,000 given on the £10,000 will be considered ribā (usury) and not halāl profit.
والله تعالى أعلم
And Allāh Knows Best
Muhammad Kalim Misbahi
