Al Sana Property Investments Glossary Glossary

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Aaqilah
An arrangement of mutual help — or indemnification — which is the foundation on which Islamic insurance practises, known as takaful, have been developed.
Ajr al-Mithl
A rent or wage amount or consideration that is determined by the market rate.
Al Sar Al Adl
The just and fair price.
Al Wakala Al Mutlaqa
Absolute power of attorney.
Amil
A worker, or an agent, who performs a task or duty deserving compensation.
Amwal
Worldly possessions including both property and money.
Aqd
A contract or agreement.
Aqd Al Bay
A contract of sale.
Aqd Ghair Lazim
A contract in which all parties have revocation rights, with the consent of the others.
Aqd Lazim
A contract in which none of the parties have the right to revoke, without the consent of the others
Arbun
A non-refundable deposit paid by the client (buyer) to the seller upon concluding a contract of sale, with the provision that the contract will be completed during the prescribed period.
Ayn
Tangible assets, such as money or property.
Bai
A 'sale' or 'contract of sale'.
Bai Bithaman Ajil
The sale of goods on a deferred payment basis.
Bai Mu’ajjal
A credit sale or deferred payment contract.
Bai salam
The sale of a commodity that will be delivered at a future date for a specific price paid in advance. In other words, it is a financial transaction (literally an upfront-payment forward sale) whereby price is paid in cash at the date of contract to the seller who pledges to deliver the commodity according to the specifications set out in the contract.
Bai Wafa
A buy-back, sale and repurchase.
Batil
Invalid sale or contract.
Bay'al Ayan
The sale of tangible assets, as opposed to sale of services or rights.
Daman
A guarantee.
Diminishing Musharaka
Diminishing partnership. One party reduces its equity in an asset with every additional capital payment made by the other party.
Fiqh a Mua'malat
A branch of jurisprudence that deals with commercial and business activities in an economy.
Gharar
The element of absolute or excessive uncertainty in any business or contract.
Gharim
A debtor who does not possess the funds with which to repay their debt.
Hamish Jiddiyah
Collateral given for a promise to purchase.
Ibaha
The rule that every economic transaction is permissible, unless expressly forbidden by the Shariah.
Ijara
An instalment leasing agreement.
Ijara with Diminishing Musharaka
The principle of ijara with diminishing musharaka can be used for home-buying services. It is essentially a co-ownership agreement. This means that both parties own the property together, with separate stakes. So, each repayment – which is part rent and part capital (and part charges) – is used to purchase the bank’s shares in the property over time. As the buyer’s stake grows, the bank’s stake shrinks. This reduces the amount of rent the buyer has to pay for use of the bank’s share of the property.
Inan
A partnership agreement in which the partners may have equal equity but unequal rights to profit, unequal equity with equal rights to profit or unequal equity and unequal rights to profit. The share in profit is usually subject to the parties' agreement and not necessarily proportionate to their contributions.
Iqtisad Islami
An Islamic approach to economic affairs.
Israf
Wasteful expenditure.
Istijar
Hiring or renting.
Istisna'a
A contract of exchange with deferred delivery, applied to specified made-to-order items.
Ja`iz
A non-binding contract.
Kafalah
Also called kafala, a Shariah-compliant guarantee. The guarantor (kafil) agrees to assume responsibility for specified contractual obligations including debt repayment or the delivery of Shariah-compliant goods or services by another party.
Mal
Anything valuable which can be possessed, such as property.
Maslaha
The public good, towards which, under Shariah law, all commercial transactions should be geared.
Maysir
Games of chance or gambling.
Mu'amalat
A transaction related to an exchange of goods or services.
Mudaraba
Mudaraba is a partnership where one partner gives money to the other to invest in a commercial enterprise. The investment comes from the first partner who is called rabb-ul-mal, while the management and work is the exclusive responsibility of the other, who is called mudarib. The division of any profit is agreed in advance
Nisab
The minimum amount that a Muslim must have before being obliged to zakat.
Qard
An interest free loan.
Rab Al Mal
The owner of capital.
Ras Al Mal
The money or property which an investor (rabb al-mal) invests in a profit-seeking venture, often in a partnership (musharakah) such as a mudarabah or shirkah arrangement.
Riba
Often interpreted as a prohibition against interest, riba is more broadly defined as a prohibition against unjust enrichment or advantage obtained by a lender without regard to risk or additional consideration.
Rushd
Age of maturity.
Sadaqah
Charitable giving. An act of charity.
Salaf
A loan which offers no profit for the creditor and is slightly different from qard in that an amount given as salaf cannot be called back before it is due; it includes loans for specified periods, i.e. short, intermediate and long-term loans.
Sarf
Currency exchange.
Sharik
The principle of Shariah that risk should be shared among all participants in a transaction and should be linked to returns. The widely held view is that one cannot profit from a venture in which one does not share the risk. A sharik may also refer to a partner, someone who shares risk, for example a partner in a Musharaka or a shareholder in a company.
Shirkah
A partnership between two or more individuals. The parties involved combine a portion of their capital or labour in order to share in the profits and losses of the business.
Sukuk
Bonds structured in such a way as to generate returns to investors without infringing Islamic law. Sukuk represents undivided shares in the ownership of tangible assets relating to particular projects or special investment activity. A sukuk investor has a common share in the ownership of the assets linked to the investment although this does not represent a debt owed to the issuer of the bond.
Takaful
The philosophical foundation of takaful can be found in Islamic principles such as co-operation, responsibility and mutual help. Due to such principles, takaful is defined as a co-operative or mutual insurance, because members of a takaful company join in contributing a certain sum of money as their subscription to a common insurance pool. Losses are divided and liabilities spread.
Tawarruq
Also known as a reverse murabaha. An Islamic finance technique used to provide working capital in compliance with Shariah. In a Tawarruq transaction, a buyer (borrower) buys an asset (typically a freely tradeable commodity such as platinum or copper) on credit from a lender on a deferred payment basis and then immediately resells the asset on the spot market for cash to a third party. Following this transaction, the: • Borrower has the required funds. • Borrower has an obligation to pay to the lender the original purchase price of the asset (usually the cost of the asset plus a profit element). • Lender has made a profit on the transaction.
Thaman
The price of an asset, service or commodity.
Tijarah
Buying something with the intention of selling it for profit, whether the profit is realised or not.
Ujrah
A generic term for a fee, especially one charged for a service.
Wa'ad
The expression of willingness and commitment by one party to perform a certain action in the future. Wa’ad is a unilateral promise binding only the promisor but not binding the promisee to accept the offer.
Wadiah
The deposit of funds or assets by a person with an Islamic bank. In this arrangement, the depositor deposits his funds or assets with the bank for safekeeping and, in most of the agreements, the bank charges a fee for the safe custody of the depositor’s funds.
Wakala
A contract under which one party appoints another to act as their agent or to manage an investment on their behalf.
Wakeel
Also known as wakil. The investment agent appointed under a Shariah-compliant agency agreement.
Zakat
The third pillar of Islam, zakat is the amount of money that a Muslim is obliged to pay to the needy in order to purify his/her wealth. Zakat is typically calculated at a 2.5% (or 2.5775% for a solar calendar year) on a Muslim’s accumulated wealth.