Issue No.1965- The mortgage agreement can either be pronounced verbally, for example, if the debtor says, “I leave this property as mortgage with you against that debt” and the creditor also says, “I have accepted it”, or that the debtor gives his property to the creditor with the intention of providing security for the debt and the creditor takes it with the same intention, the mortgage is in order.
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Issue No.1966- The mortgagor and the mortgagee should be mature and sane, and should not have been coerced by anyone. Moreover, they should not be mentally incompetent, or a bankrupt person who is prohibited from having discretion over his properties by the Islamic judge.
Issue No.1968- The property which is mortgaged should be permissible for purchase and sale. Hence, if wine, or a gambling instrument, etc., is mortgaged, the transaction is not in order.
Issue No.1970- The obligatory precaution is that a mortgage should not take place without delivering the mortgaged property to the creditor. However, in case the mortgage is done in such a way that for example, a house is mortgaged in accordance with a title deed, and then the title deed is given to the creditor so that if necessary, he can take his claim from the proceedings of its sale, though the debtor may be living in that house, there will be no harm in it.
Issue No.1971- It is not permissible to bring about changes which are in conflict with the mortgage agreement. Hence, neither the creditor nor the debtor can transfer a property [by selling it or give it as a gift or the like] which is mortgaged to another person without the consent of the other party. However, if one of them presents or sells the property to another person, and the other party permits this later, there is no harm in it. And the recommended precaution is that neither of them should utilise the property even in other than foresaid cases without the permission of each other, though it might not be in conflict with the mortgage.
Issue No.1972- If the creditor sells the property which is mortgaged with the consent of the debtor, the mortgage becomes void and the sale proceeds will not be considered as mortgage like the property itself, unless the permission of the sale is given with this condition that the sale proceeds would be instead of that mortgage.
Issue No.1973- If the debtor fails to repay his debts at the due time, the creditor can sell the mortgaged property and collect his debt and should give the amount in excess of his debt to the debtor, and if he has access to the Mujtahid or his representative, he should, as an obligatory precaution, get his permission in doing so.
Issue No.1974- If the debtor has not paid any mortgage and if he does not possess anything other than his house which he resides in, and the essential household effects, the creditor cannot demand the repayment of debt from him, rather, he should give him time. However, if he has mortgaged a property, the creditor may sell it and collect his dues (even if the property is one of the exempt items listed above).
Issue No.1975- It is a common practice among some people that they give a deposit to the owner of the house and take the house as a mortgage on the condition that they pay less rent, or pay no rent at all (such a house is usually referred to as a mortgaged house), this is usury and haram. The correct method is that the owner should first rent out the house to the tenant for an amount, though little, and he stipulates in the lease contract that the tenant should give him a specified amount of loan and the house will be as mortgage against it, in this case it will not be usury, and it will be halal.
Issue No.1976- If a person wishes to stand surety for the repayment of the debt of another person, he can utter the verbal formula in English or Arabic or any other language and say, for example, “I guarantee to pay the debt of Mr. so and so”, and the creditor also says, “I have accepted it” or he can do it by signing the surety agreement, or doing any other act that makes the creditor understand this matter, and he (the creditor) also accepts it.
Issue No.1977- After a person stands surety to repay a debtor’s debts, he becomes responsible for the debt, and the debtor will be free of any obligation. In case however, the guarantor has stood surety at the request of the debtor, whenever the guarantor pays the debt, he can claim it from the former debtor. There is another kind of surety in which a person gives a guaranty and says: "If the debtor does not repay your debt I shall pay it"; this kind of surety is also in order. In fact, most of the sureties that take place in banks or against loans are of this kind. (The first type of the surety is called transference of liability from one individual to another, and the second one is called addition of one obligation to another, and both of them are in order.)
