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Is a contract that includes a penalty clause obligating the tenant to pay 400 pounds in the event of vacating the apartment before the end of the agreed-upon rental period (six months) considered a legitimate contract in Islamic law?

1 min readAlso available in العربية

The lease is a binding contract, which neither party may unilaterally terminate without the other's consent, as long as they are within the contract period. Therefore, if the tenant moves out before the period ends, they must pay the full rent because the landlord owns the full rent and the tenant owns the usufruct, as long as the landlord has handed over the property and enabled the tenant to benefit from it. However, agreeing to pay a financial penalty if the tenant leaves before the period ends is impermissible due to the presence of gharar (excessive uncertainty), and thus this contract is considered void and terminated before the usufruct is lost. If the usufruct is lost, then the equivalent rent (ujrat al-mithl) is due.

Summarized from the full answer at Ftawy · reviewed Sep 2, 2026

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