Diminishing partnership ending with ownership and leasing in real estate and its applications

Abstract

The research reviews the issues related to the application of the diminishing partnership contract in the State of Australia, where it is noted that there is a significant gap between the jurisprudential guidance provided by the contemporary jurisprudential councils, and the actual practice applied to implement the diminishing partnership contract. Problems related to the implementation of the contract of diminishing participation appear more clearly in the judicial system in Western countries in general and in Australia in particular, as the laws in those countries do not support the application of financing in the Islamic way. The researcher chose the Islamic Co-operative Finance Australia (ICFAL) as one of the Islamic financing institutions in the State of Australia as a model with regard to the application of the diminishing partnership contract. The researcher has applied the inductive method by following what was written on this subject, as well as, the analytical approach to analyze the scientific materials extracted from this study. The researcher has highlighted a number of issues that need to consideration in the application of the diminishing partnership contract in the State of Australia; Such as tax issues and issues related to the transfer of ownership, and how to guarantee the rights of the Islamic financial institution when executing the contract, as it was shown through this study that one of the main conditions for dealing with these issues: is taking the mortgage by (guarantee) when buying the house as shown in the financial table attached to the contract to represent the diminishing partnership relationship. Among the recommendations is the importance of reconsidering the important jurisprudential rule: “Necessities make prohibitions permissible,” and its impact on the permissibility of taking a mortgage in a diminishing partnership contract.

Keyword: Diminishing partnership, ICFAL, Mortgage