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Photo credit: photodune.

Seattle officials support Islamic mortgages

Photo credit: photodune.

Photo credit: photodune.

OnIslam & News Agencies

WASHINGTON – In an effort to increase home ownership among US Muslims, a proposal in Seattle meant to offering financing compliant with Islamic law is gaining ground according to the Fox News.

“We will work to develop new tools for Muslims who are prevented from using conventional mortgage products due to their religious beliefs,” Seattle Mayor Ed Murray addressed a press conference July 13, Fox News reported on Wednesday, July 22.

“The City will convene lenders, housing nonprofits and community leaders to explore the best options for increasing access to Sharia-compliant loan products to help these residents become homeowners in Seattle,” according to his proposal released last week.

Amid increasing Muslim population in the city, estimated at 30,000 practicing Muslims, a Seattle housing committee suggested community and business leaders find a way to help them.

Exploring financing options for devout Muslims, a Shari`ah-compliant financial products has drawn fire, with critics warning that it opens the nation’s financial system to extremists.

However, the mayor’s support for the new plan is expected to give it a strong push forward.

Opposition to the plan started in 2008 when some lawmakers opposed American International Group for offering Shari`ah-compliant insurance programs.

“You may defend your decision to offer Shari`ah products and will probably state that they have no real ties to Shari`ah law, and therefore pose no threat. You are wrong,” the lawmakers wrote in the Dec. 18, 2008 letter.

“Like Britain, the way to America’s legal code is through its wallet, and if Shari`ah law gains a strong footing in the United States, it will be through Shari`ah finance and Shari`ah products.”

While Seattle leaders want more lenders taking part in the Shari`ah program, there are some already offering such unconventional financing.

Seattle-based Halal Inc. advertises on its website that “instead of starting with a flawed system and trying to ‘make a fit,’ we took the perfect system ordained by Allah and created a legal framework for it.”

Islam forbids Muslims from usury, receiving or paying interest on loans.

Islamic banks and finance institutions cannot receive or provide funds for anything involving alcohol, gambling, pornography, tobacco, weapons or pork.

Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

 

Drafting a Land Contract 101

By Adil Daudi, Esq.

As the banking industry continues to monitor with great strictness on who is a prime candidate for a mortgage, more and more people are turning towards an alternative method when it comes to purchasing real estate – a land contract.

A land contract is an agreement between the buyer and seller, whereby the seller provides financing to the buyer for the buyer to purchase the property on an agreed upon purchase price. Typically, once such an agreement is drafted, the buyer puts a minimal down-payment, and subsequently agrees to make monthly installments to the seller that goes towards the total purchase price; and after a certain period, the buyer is to make a balloon payment for the balance remaining. Under such an agreement, the seller continues to hold legal title to the property; however the buyer is entitled to possession of the home. It is only after the buyer pays the total purchase price that the seller transfers legal title over to the buyer.

As it remains difficult for people to be approved for mortgages, a land contract provides the buyer with the luxury of not having to go through a lending institution for financing. Therefore, if you are someone with a poor credit rating, you can still purchase a home through a land contract without your rating being reviewed, as the contract is strictly between the buyer and seller.
If you, or someone you know, are currently involved in a land contract transaction, or are on the verge of entering into one, it is always advised to consult with a professional attorney to make sure you have a sound agreement in place. However, as a starter, the following are three (3) commonly overlooked headings that often don’t get the attention they deserve in an agreement, but can cause substantial problems down the road.

1.    Names and Purchase Price: Too often people forget to include the names of the parties involved in the agreement. As important as it is, people tend to overlook this information. In addition to including the names of the parties, it is imperative to include, with clarity, the breakdown of the purchase price, including the down payment, monthly payments, interest rate, whether there is a balloon payment expected, and the term of years.

2.    Description: Another commonly overlooked heading is the description of the property being sold. Aside from the actual address of the property, it is highly advised to include the legal description of the property.

3.    Possession: Remember, throughout the period where the buyer is making payments to the seller, the seller has full legal title to the property; however the buyer has possession interest. Therefore, in order for the buyer to become the actual owner of the property, they must satisfy the terms of the contract and then receive title ownership from the seller.

4.    Utilities: Far too many people assume the buyer (or seller) will be paying for utilities. Having such a clause in your agreement will avoid future issues and will make it explicitly clear on whose responsibility it is. In the event the buyer fails to make consistent payments on its utility bills, the seller has the necessary evidence to prove it was the buyer’s responsibility; therefore the buyer must reimburse the seller for any payments made.

Despite the many advantages a land contract can offer, without the proper drafting it can just as easily be a disadvantageous document. It is therefore always advised to consult with a professional prior to signing any such contract. It is always better to seek counsel once and live with the peace of mind of knowing that the agreement is sound and drafted to serve your best interest.

Adil Daudi is an Attorney at Joseph, Kroll & Yagalla, P.C., focusing primarily on Asset Protection for Physicians, Physician Contracts, Estate Planning, Business Litigation, Corporate Formations, and Family Law. He can be contacted for any questions related to this article or other areas of law at adil@josephlaw.net or (517) 381-2663.

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