Rafed English

Fatwas on Right of Pre-emption

Q1619: When two persons share in an endowed property and one of them sells his share — in a case he is allowed to do that, does the other enjoy the right of pre-emption? If two people rent some property — whether or not it is an endowment, then one of them transfers his right to the other through either a rent or ṣulḥ contract, does the other have the right of pre-emption? To give an example, one of the partners sold his share to a third party where it is shar‘ī to do so. And is it permissible where renting is involved? To give an example, two people jointly rented some property or an endowment. Is it permissible for either party to transfer their share by way of sub-letting the property to a third party?
A: Pre-emption is confined to the partnership in things themselves [not in using something as in the rent] if it is shar‘ī for one of the two partners to sell his share to a third party. Therefore, there is no right of pre-emption in an endowed property in which two people share even on the assumption that one of the two parties is allowed to sell his share to a third party. Nor is there such right in situations where some property was rented out to two people and one of tenants transfers his share to a third party.

Q1620. From Islamic texts it is understood that if one of the two partners sells his share to a third party, the second partner is entitled to the pre-emption right. However, could the encouragement, by the second partner, of a potential buyer to buy the share of the other partner or making it known that he is not going to exercise pre-emption if the third party buys the share of his partner, be considered a relinquishment of pre-emption right?
A: The initiative taken by the partner to encourage the third party to buy the share of the other partner per se does not run counter to exercising pre-emption. Indeed, even his promise of not exercising it does not necessarily take away pre-emption, after the transaction has gone through. That is unless that promise has been stipulated in an Islamically irrevocable contract.

Q1621: Is dropping pre-emption right before one of the partners sells his share to a third party, perceived as unlawful?
A: Forgoing pre-emption is not valid unless it actually takes place, i.e. by the partner selling his share to a third party. However, there is no objection to the partner’s giving an undertaking in an Islamically binding contract that he is not going to resort to pre-emption when his partner sells his share.

Q1622. A person rented one floor of a two-storey building. The property is owned by two brothers who are indebted to the tenant for a sum of money. Despite repeated requests by the creditor, the two brothers have been avoiding payment of the debt for the past two years. He concluded that it is within his right to retrieve his money by possessing a portion of the building. The value of the property is higher than the value of debt. In this way, he becomes a partner in the property of the two brothers. Can he exercise pre-emption on the rest of the property?
A: As the question goes, there is no case for pre-emption. Pre-emption can be exercised by one of two partners after the other sells his share to a third person provided that the partnership exists before the transaction. It cannot be acquired as a result of becoming a partner by virtue of buying the share of one of the partners or owning it as a result of settling a debt. Furthermore, pre-emption cannot be activated unless the property is owned only by two people.

Q1623: Two people jointly bought some property whereby it was officially registered in their names. However, in a separate contract, they partitioned the property into two, each with its own boundaries. Has either party the right to exercise pre-emption over the property of the other partner, in the event of sale, by virtue of having an official document pointing to the joint ownership of the property?
A: If the sold share, at the time of sale, was clearly defined and demarcated as an independent one, the mere fact they have only one legal document does not bring about the right of pre-emption.

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