Rules regarding Mortgage (Rahn)
2309. Mortgage means that a person effects a conveyance of property to
another person as security for money debt, or property held under
responsibility, with a proviso that if that debt is not paid, the creditor may
pay himself out of the proceeds of that property.
2310. It is not necessary to pronounce a prescribed formula for
effecting the mortgage. If the debtor conveyances his property to the creditor
with the intention of providing security for the debt, and the creditor accepts
it with the same intention, the mortgage is in order.
2311. The mortgagor and the mortgagee should be adult and sane, and
should not have been coerced by anyone. Moreover, the mortgagor should not be
bankrupt and feeble-minded. The meaning of 'bankrupt' and 'feeble-minded' have
been given in rule 2262. But if the property mortgaged does not belong to the
bankrupt, or if he has not been prohibited to use it, there is no objection.
2312. A person can mortgage that property over which he has a right of
disposal or discretion, and it is also in order if he mortgages the property of
another person with his permission.
2313. The property mortgaged must be such in which trading is
permissible by Shariah. Hence, if alcoholic liquor or something like it is
mortgaged, the transaction will be void.
2314. The benefit which accrues from the mortgaged property, belongs
to the owner, whether the mortgagor or any other person.
2315. The mortgagee cannot present or sell the mortgaged property to
another person without the permission of the owner, whether he is the mortgagor
or any other person. However, if he presents or sells it to another person, and
the owner consents to it later, there is no harm in it.
2316. If a mortgagee sells the mortgaged property with the permission
of the owner, the sale proceeds will not be considered mortgaged like the
property itself. And the same will apply if the he sells it without the
permission of the owner, but the owner endorses the transaction later.
But if the mortgagor sells it with the permission of the mortgagee, with an understanding that its proceeds will be be mortgaged, that is, the sale proceeds of that property will get mortgaged like the property itself, then he must follow the understanding. And if he contravenes it, the transaction will be void, except when the mortgagee gives his assent.
2317. If the creditor demands the repayment of debt when it is due,
and the debtor does not repay it, the creditor can sell the mortgaged property
and collect his dues, provided that he had been authorised to do so. And if he
was not authorised to do so, it will be necessary to obtain permission from the
And if the debtor is not available, he should obtain permission for the sale of the property from the Mujtahid. In either case, if the sale proceeds exceed the amount due to him, he should give the amount in excess of his debt to the debtor.
2318. If the debtor does not possess anything other than his house he
occupies, and the essential household effects, the creditor cannot demand the
repayment of debt from him. But, if the thing mortgaged by him is his house and
its household effects, the creditor can sell them, and realise his dues.