Ijarah Agreements: Types and Conditions for Islamic Financing

Islam is a religion that governs many aspects of the lives of its followers. Including the economic aspect. In the rules of Mumalah Fiqh There are many types of financial transactions including buying and selling (bai’), renting (ijarah), purchasing (salaam), pawning (rahn), mudraabah and many more.

In this article, the author will discuss about ijarah contracts and examples. Considering that this contract is often used in various mechanisms. Shariah Bank as well as in everyday life

Understanding the Ijarah Agreement

Before understanding the meaning of ijarah contract, you must first understand the difference between usage rights and property rights. A right of use is a right granted by one party to another to obtain the use or benefit of a certain asset. Property rights are the rights granted by one party to the other party to acquire all assets.

Contrast with ownership rights. Only when you have received permission to use the content. You may not use the Content other than the usage details set forth herein. The usufructuary owner cannot pass the property on to his or her children or sell the property. The same is true if you have ownership rights to the property.

Report from Nu onlineSyke Nawawi Banten is one of the Islamic jurisprudence scholars from Indonesia. Define the Ijarah contract as:

God’s Demand

“Contracts (transactions) for certain benefits known in advance that can deliver these benefits are allowed (permitted) with wages that are known in advance.”

Meanwhile, according to DSN MUI fatwa No. 09/DSN-MUI/IV/2000, an ijarah contract is a contract that involves the transfer of a license or right to receive benefits for goods and services from one party to another. one within a period of time

From the above definitions, it can be concluded that an ijarah contract is a transaction transferring the right to use and/or the right to benefit for goods and services within a certain period of time. A transaction can be said to be ijarah if it consists of wages (ivadh).

Simple example One of the daily ijarah contracts is when you rent a house. The parties involved are you and the owner of the lease. The wages (iwadh) referred to are the rent. The rented item is the house. The typical rental period is one year. and the usufruct that is transferred is the right to use the house.

Provisions in the Ijarah Agreement

In the muamalah contract, whether economics is involved or not. There are two types of requirements that must be met for a contract to be declared valid. The two types of provisions are:

1. Get along well

Rukun is a transaction condition that must be met. While the transaction is in progress– The main pillars of the Ijarah Agreement are:

1. Statement of delivery of rights to use or benefits for goods and services (Shihat–– This includes if both parties are asked to sign lease documents for the relevant assets.
2. There are parties involved.– Both the lessee and lessor must be present when the ijarah transaction is ratified.
3. Guarantees of benefits and use of rented goods and services– The lessor has a duty to guarantee the use of the rented goods and services.
4. Ujrah (wage)– Both the Ujrah and the benefits in the Ijarah contract must be determined and agreed upon first. This means in a contract or speech. The parties clearly agreed on a certain salary, for example “R700,000”.

2. Conditions

Conditions are the transaction conditions that must be met. Before the transaction takes place Conditions for ijarah are divided into two categories:

Conditions of the contracting party

Just like any other transaction. The parties involved in an ijarah contract must:

1. Mature and intelligent In this case, it is necessary to question the authenticity of rental transactions carried out by young children or crazy people.
2. Not required– Transactions carried out by a counterparty due to force or pressure from another person can be void or invalid.

Conditions for the Purpose of Ijarah

The purpose of ijarah, in this case, is in the form of goods or services. The following requirements must be met:

1. clearBoth in terms of format and benefits
2. According to Islamic law (Mubah)– In this case, the goods and services rented are not goods and services that are haram in Islam. Examples of ijarah contracts that are prohibited because the object violates religious rules include: human trafficking or leasing land or buildings that are still in the dispute process
3. It has Islamic value and the lessor can deliver it to the lessee.

Types of Ijarah Contracts

There are many types of ijarah contracts used in daily life and in Islamic banking. The following include:

1. Ijarah or Mutlaqah

Ijarah ‘ain or muthlaqah is a general rental transaction of property or goods. The lessee receives the right to use the asset. and the lessor receives ‘ujrah’. An example of this type of ijarah contract is the rental of a house or commercial building.

2. Ijarah Charity

Ijarah charity occurs when you hire the services of someone to do something. In this case, you act as a renter. and that person becomes a renter entitled to receive wages. An example of this type of Ijarah contract is You hire a builder to build a house. or hire a private investigator to investigate a particular case

3. Ijarah Muntahiya Bittamlik (IBMT)

contract Ijarah Muntahiyah Bittamlik It is an ijarah contract with an agreement to transfer ownership of the asset at the end of the transaction period. In this contract, the lessee has the opportunity to become the owner of the rented property either by purchasing it or by receiving it as a gift from Lessor This contract is widely used in Shariah banks. This is especially true in home mortgage transactions.

4. Ijarah Mausufah bi al-Dimma

Ijarah Mawsufa Bi Al-Dhimma is a combination of Ijarah promises with greetings. (Statement) In this case, the lessee only specifies the quality and quantity of the ijarah object, while the lessor is obliged to comply with the quality and quantity of the ijarah object and ensure that the object can be delivered within the specified time.

A simple example is that you hire a real estate agent to search for houses based on criteria A, B, C, and D as a renter. Real estate agents are obliged to receive Ujrah or money for their services. and has a duty to inform the tenant of the readiness of Their preferred property, like IMBT, is generally based on Ijarah Mawsufa Bi Al-Dhimma. Islamic mortgage financingEspecially KPR Inden

Example of an Ijarah Agreement

Let’s look at an example contract. Ijarah Muntahiyah Bittamlik– For example, there is developer company A that sells subsidized houses for 150,000,000 Indonesian Rupiah. You, as a Bank B customer, tell the bank that you want to own the home in the contract. Ijarah Muntahiyah BittamlikThe bank needs to first purchase the house from Developer A for IDR 150,000,000.

After that, you will have to repay the principal amount of the house over 10 years, with monthly installments of IDR 1,250,000 over the 10-year period. But you also have to pay Ujrah of the bank as the lessor in a predetermined amount.