Customers are able to sell the home anytime they wish. As the Grantor of the Trust, they can direct the sale at their sole discretion.
The most common question people ask are:
- What happens in terms of profit at the time of sale? In an IjaraTM transaction there is no sharing of the gain or loss, 100% of the gain or loss belongs to the customer. There is however a scenario in which the investor could also incur a loss.
- If there is no sharing then how can it be Sharia Compliant? The concept that there should be sharing of gain or loss is a valid concept in subject of Islamic Financing, and it is true that the parties would share according to their percentages. In an IjaraTM transaction there is only one owner, the Trust, and so there is no one to share with. The beneficiary of the Trust is legitimately from a Sharia and Western law perspective 100% entitled to the gain and/or loss. There is no short cut here, some of our competitors utilize either a Musharaka or Murabaha process and simply say they will forgive their gain, but in that case they should simply call the process they use what it is, a Finance transaction, not a truly Islamic Finance transaction.
- What happens if there is a loss? The answer here is fairly straight forward, you cannot have 100% of the gains with also having the prospect of a loss. There is no way to legitimately be Sharia compliant and have a transaction skewed in the favor of one of the parties to an agreement. Islamic Finance arrangements are inherently fair to all parties, so if you want all of the gain, then you would also have to accept the possibility of having all of the loss. That being said there is a scenario in which both parties could suffer a loss.