Musharakah Mutanaqisah

Definition of "Musharakah Mutanaqisah"

Musharakah Mutanaqisah is a contract of partnership between two parties, where one partner gradually buys the whole parts of the property. The transaction starts with the formation of partnership, after which buying and selling of the equity take place between the two partners. It is therefore necessary that this buying and selling should not be stipulated in the partnership contract. In addition, the buying and selling agreement must be independent of the partnership contract. It is not permitted that one contract should be entered into as a condition for concluding the other.