A LOAN FROM HARAM MONEY FOR INVESTMENT

A LOAN FROM HARAM MONEY FOR INVESTMENT

QUESTION.

As-salamu `alaykum.

I want to borrow money from someone and use that money to build houses. Then I plan to sell some of the houses and rent the others out. The problem is that the money of the person from whom I want to borrow is haram (it is not even halal money mixed with haram, rather all of his money is haram). If I borrow his money and build the houses with it, will the money I get from selling and renting out the houses be halal for me, as the houses have been built with haram money? Thanks!

ANSWER.

Wa `alaykum as-salamu wa rahmatullahi wa barakatuh.

In the Name of Allah, Most Gracious, Most Merciful.

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

Generally speaking, Islam calls for investing money by all lawful means and condemns storing wealth not spending it in people's benefits.

However, a Muslims is not allowed to borrow and invest money that he is quite sure that is unlawful (haram).

Responding to your question, Dr. Monzer Kahf, a prominent Muslim economist and counselor, stated,

"The more important question is: how do you determine that his money is haram? And what gives you the right to poke your nose in other people’s hearts, actions, and behaviors?

Money can be haram if it is forfeited, i.e., false or not real money, or if you saw the person steeling it from its true owner. Otherwise you cannot even determine that interest–based banks money is haram.

The most that can be said about interest-based banks is that their interest transactions (not money) are haram.

If the money is stolen or forfeited you must not borrow it and if you do knowingly, you are then a part of the crime."

Moreover, Dr. Wael Shihab, PhD in Islamic Studies, Al-Azhar University, and the Head of OnIslam.net’s (English) Shari`ah Dept. added,

"Though you are not to ask about the source of money of the person you would take a loan from, if it happens that you know for sure that his money is 100% haram, I don’t recommend dealing with him. I think that normal financial dealing with such a person encourages him to continue in earning haram money. So, I see that if you—and other people as well—avoid normal financial dealings with him, he may reconsider the source of his money and look for halal avenues.

If somebody has halal and haram money, you may take a loan (without interest of course) from him. However, you should properly advise him to clean himself of the haram sources of money and stick to what is halal."

Allah Almighty knows best.