Section Five
Mortgage
Ar-Rahn
In scholars' terminology, rahn is: an agreement to make an asset a security for claiming back a debt when the debtor fails to pay it off, or a security for an asset that is in the possession of another person as a result of misappropriation (ghasb), borrowing or the like, when he refuses to return it, return a similar item, or pay the equivalent of its value when damaged. The debtor is called ‘rāhin’ (mortgagee), the creditor ‘mortahin’ (mortgagor), the asset serving as the security ‘merhūn’ or ‘rahn’ (mortgage security). The details of its rulings are as follows:
1171. The mortgage contract between the mortgagor and mortgagee is established using any wording that gives the meaning, including proposal from one of the parties and acceptance by the other. It can also be established using actions, writing or signs; it can even be established if made a condition within a binding contract, such as a loan, sale or the like, such as if the mortgagor says: ‘I am lending you this hundred on the condition that this wrist watch is made a mortgage security for it’ and so on.
1172. A mortgage is a binding contract on the mortgagee's side and flexible on the mortgagor's side, so the mortgagee has no right to retract from it and take the mortgaged asset as long as he still owes the debt, unless the mortgagor cancels his right in the asset and invalidates the mortgage contract.
1173. For the mortgage to be valid, it is not conditional that the mortgagor is handed over the mortgaged asset, but the mortgagor has the right to make it binding on the mortgagee to place the asset at his disposal or under his control.
1174. The conditions of the security are:
1- It must be a physically specific asset, so it is not valid if from the outset the mortgage contract is established using the asset’s benefit, nor relates to a debt that is owed by the creditor, nor whatever it unspecified of a specific asset, such as making the security an unspecified copy of a specific book. That said, it is not conditional that it is specified in itself among a group of specific items, but it is valid if, for example, the security is a copy from this set of copies of a certain book, which is called ‘unspecific item of a specific type of asset/thing’ (kolli fil-Mo‘ayyan).
2- The asset must be allowable for the mortgagee to dispose of through buying or selling, even if within the mortgage framework; it is also conditional that the asset is not an alcoholic beverage or pig if both contracting parties or one of them is Muslim.
3- The asset must be specified, so it is not valid to mortgage an obscure thing, such as mortgaging either this car or this house. However, it is not conditional that it comes with a specific description of nature, type or amount provided that its value and financial significance are known.
4- The asset must be suitable for survival until the date of paying off the debt and the ability to receive it takes place.
1175. It is allowed to take security using something similar to a mortgage in situations where a mortgage is not valid, by making it conditional in a binding contract; so it is valid that the buyer makes it conditional on the seller to make something a document in the hand of the buyer so that he can take in exchange for the price that he paid if it is later discovered that the sold thing was due to be handed over to a third party; it is also valid to make a benefit or an unreceived debt a document for his debt by making it a condition in a binding contract, such as if the lender says: ‘I am lending you this hundred for a year on the condition that you make the benefit of your so and so house a document on my debt.’
1176. If the debt became due and the mortgagee does not pay the debt to the mortgagor, the mortgagor – in the beginning – has no right to take the initiative himself to get his debt from the asset mortgaged with him unless he had made that a condition for himself, but he must turn to the mortgagee and claim his debt from him; then if he does that and he pays off his debt – even if by selling the mortgaged asset – then the matter is settled. But if he refuses, the mortgagor should then resort to the Islamic authority; the latter will order the mortgagee to sell, and if he refuses, he will force him to do so; but if this is not possible, the authority will take the asset from him, sell it and pay off the debt to the mortgagor if the Islamic authority exists but has no practised authority (ghair mabsūt al-Yad), the mortgagor will be allowed to sell the asset after obtaining the Islamic authority’s permission, and claim his debt from it. It is also allowed to sell the asset upon the permission of the Islamic authority when it is not possible to obtain the permission of the mortgagee due to his absence, being in a coma or the like, but if the Islamic authority does not exist, it is allowed for the mortgagor to take the initiative of selling it and claiming his debt.
1177. If the mortgaged asset is one that the mortgagee needs for his living, such as the house in which he lives, his car or the tools of his profession, this does not prevent it from being sold to pay off the debt.