Bayu-Alamanah & Property Transactions
There are three types of Bayu-al-amanah in terms of Islamic finance. They are Murabahah, which is the cost plus sale of a property as well as Tawliyah or sale at cost and Wadiah, which is the sale at specified loss. Bayu-al-amanah is an Islamic finance term meaning a fiduciary sale. The fiduciary sale is broken down into these three banking terms used for Muslim mortgage transactions. These terms show a variety of ways in which to transfer property in a contract. Selecting the right Islamic banking method will change the way your transaction takes place.
Whether you are in search of a vacant piece of land or a large building in a city, you will need to consider what type of Bayu-al-amanah vehicle you want to use to get the best results. Carefully consider the differences between Tawliyah, Wadiah and Murabahah when it comes to the particular property and your particular financial situation. Each has a bit of a different consideration in terms of a Muslim mortgage and each has its own caveat of requirements that make it true to the sale.
Murabahah is where the cost consideration includes a markup to the seller based on what the market value is combined with what they need to make the deal worth the effort for them. This is an above board way of attaining Islamic finance options and provides all parties with an honest view of the transfer of funds. This particular of Islamic finance term requires an honest declaration of cost and therefore is one of the most above board ways to transfer property. All the information about what the property is worth, what the seller owes on the property and what the seller stands to gain from the sale is made available.
The term Tawliya refers to the sale at cost. This means the sale is being made at the cost of the seller or what they paid for the property. This is a measure to move a piece of property rapidly and ensures that the buyer is going to pay only what the seller has paid for the property. This type of a sale is one that will not give the seller a profit in the sale but it also ensures that they do not have a loss. This type of a sale would require that the information about the property cost be available for the buyer to confirm. It is a good deal for most buyers because they are getting the property for a price often at or below market value.
The third type of Bayu-al-amanah is Wadiah or sale at specified loss. This is often done when a seller needs to get out of a property and cut their losses. In the United States it is sometimes referred to as a short sale. Taking into account what the loss is at the time of the sale versus what the loss would be if the property is not sold is a big part of deciding for this type of sale. Selling a property at a loss would often allow a seller to get out of a loan before suffering more loss.