Can I Sell a Property Without Owning It First?

Answered by Shaykh Muhammad Carr

Question

Is it permissible to sell a distressed property at a higher price without owning it, and take the difference as profit while giving the seller their original asking price?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

I pray you are in good faith and health. May Allah reward you for ensuring your transactions align with Islamic Law.

Allah says,

“O you who believe, devour not your wealth between you through falsehood; but only through trade by your complete mutual consent.” [Quran, 4:29]

It is impermissible to sell something that one does not own or possess. The Prophet (Allah bless him and give him peace) said,

“Do not sell what you do not own.” [Tirmidhi]

The alternative is to purchase the house with a three-day conditional option (khiyar al-shart). This grants both the buyer and the seller, or one of them, the contractual right to cancel the sale within that period. During this interim, you are considered the owner and take constructive possession of the property, allowing you to sell it. If the buyer later chooses not to proceed with the purchase, you can return the house to the original seller by exercising your right to withdraw during the cooling-off period.

Why Ownership and Taking Possession Are Crucial

The Prophet (Allah bless him and grant him peace) said,

“Do not sell what you do not own.” He also said, “Do not sell what you have not taken possession of.” [Tirmidhi]

When the seller does not take possession of the commodity before reselling it, the transaction takes on a usurious appearance. Ibn Abbas explains that if the underlying equity is absent in the second sale, it resembles a scenario in which the seller simply gave $100,000 and received $110,000 in return. [See: Ibn Hajar, Fath al-Bari]

And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani

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 to 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‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.