Badal al-khuluw

Definition of "Badal al-khuluw"

Lit: Compensation for getting a leased property vacated from the tenant. Tech: It has four possibilities: (i) The owner of a property agrees to pay a certain amount in lump sum over and above the monthly rent, which is usually a small amount. The lump sum is supposed to be rent of the property. In case the owner gets the property vacated prematurely, he has to return part of the lump sum. In such cases, total period of the lease is also determined before hand. This is considered lawful in the shari‘ah. (ii) The above agreement can take place about a property which is already leased but the agreement for badal al-khuluw takes place during the currency of the current lease. This is considered lawful in the shari‘ah. (iii) The agreement for badal al-khuluw takes place after the lease is expired. It is not lawful to enter in such an agreement as the lease agreement is already over and now the owner or the tenant cannot claim anything from each other. (iv) During the currency of the lease, the tenant, in agreement with the owner, sub-lets the property to another lessee and the new tenant agrees to pay some compensation to the owner and the old tenant. This is also covered by the shari‘ah. The system of badal al-khuluw is also known as pagari system in Indo-Pak subcontinent.