What Is Ijarah Agreement

Really the simplest of all Ijara contracts, simple Ijara, is a form of operating lease where the owner of the property or asset continues to exercise property rights, bear the costs of maintaining the assets and also bear the risks resulting from the use. This is a short-term contract in which the tenant can release himself from the agreement at any time, but after notice. The total cost of the equipment or asset will not be amortized during the initial phase of the agreement. Ijarah (Arabic: الإجارة, al-Ijārah, “something to rent”[1][2] or “provide services and goods temporarily for a wage”[3] (a noun, not a verb)), is a fiqh (Islamic jurisprudence)[1] term and a product in Islamic banking and finance. In traditional fiqh, it is a contract for the rental of people or the rental/rental of services or the “usufruct” of a property, usually for a fixed duration and price. [4] When hiring, the employer is called musta`jir, while the employee is called ajir. [1] Ijarah does not have to drive to the purchase. In conventional leasing, an operating lease does not end with a change of ownership, nor does the type of ijarah known as al-ijarah (tashghiliyah). [4] Ijarah is a term in Islamic fiqh.

Lexically, it means “to give something to rent”. In Islamic jurisprudence, the term “ijarah” is used for two different situations. First, it is “the use of a person`s services in return for a salary paid to him in return for his services leased”. The employer is called musta`jir, while the employee is called ajir. This is a contract in which a person rents their property to another person to rent it. For example, someone rents their car to another person and receives rent in exchange for the usufruct of the car. In this contract, ownership of an asset remains the property of the lessor. However, the property is transferred to the lessee in order to obtain the benefits and usufruct. When the period of Ijarah is over, the property is returned to the owner who owns it.

Term lease (ijara mawsoofa bil thimma): This contract is a combination of mortgage (istisna) and a repayable lease. Since this lease is executed for a future date, it is called a term lease. The term lease buys the project (usually a construction project) as a whole upon completion or in tranches (parts) of the project. This is a contract in which someone hires or employs a person with a salary. The agent provides his services for a fee. In this context, the employer is called “al-mustajir” and the employee “ajeer” […].