Can Mudaraba Be Employed to Generate Rental Income?
Answered by Shaykh Muhammad Carr
Question
Is it permissible under Mudaraba for me, as the investor (Rabb al-Mal), to provide funds to the entrepreneur (mudarib) to purchase a vehicle for rental income, considering the differing opinions on permissible business activities, such as trading?
Answer
In the Name of Allah, the Most Merciful and Compassionate.
Mudaraba cannot be employed as a vehicle to generate rental income. The alternative is for you to hire the person and pay him a salary.
Mudaraba inherently involves a degree of contractual risk (gharar), which is tolerated due to the necessity of such contracts. However, this concession is limited to business (tijara) and does not extend to other activities, such as manufacturing or employment [See: Khatib, Mughni al-Muhtaj]
And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Mohammad Abu Bakr Badhib
Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door for students. As an imam, he has the unique opportunity to serve his community in daily life.
In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.
