Selling undeveloped property to third parties

Q. If a purchaser purchased property Off-Plan from a developer, can he sell it to a third party before the development of the property is completed? 

A. If a purchaser purchased property Off-Plan from a developer, the purchaser cannot sell the undeveloped property to a third party until the development of the property is completed and the property enters his ownership.

If however, the purchaser intends selling the undeveloped property to a third party, the purchaser may enter into a Parallel Istisnaa’ (development) contract with the third party.

Once the developer completes the development of the property, delivers the property to the purchaser and the property enters the purchaser’s ownership, the purchaser can deliver the property to the third party. In this way, it would be permissible for the purchaser to sell the undeveloped property to the third party before the development of the property is actually completed.

One must ensure that the first Istisnaa’ (development) contract with the developer and the second Istisnaa’ (development) contract with the third party are totally separate and governed independently from each other to ensure that it is Shariah-Compliant. (An Introduction To Islamic Finance 199)

Allah Ta’ala Knows Best

Mufti Ismaeel Bassa

themufti.com