What is the ruling on establishing a partnership to finance the construction of an apartment attached to a house, where the partner pays an amount to cover part of the cost, then receives monthly profits until his money is recovered and the ownership of the apartment is fully transferred to the first partner?

The mentioned transaction, known as Diminishing Musharakah (Diminishing Partnership), is permissible if the following conditions are observed:

1. The two partners agree to invest their money in building the apartment, and the profit (rental income) is according to the agreement, while the loss is proportionate to the capital. 2. The two partners agree that one party will gradually purchase the share of the other in the apartment, with the selling party's share of the rent decreasing accordingly or remaining the same. 3. A binding promise is issued by only one of the parties to gradually buy or sell their partner's shares, and the other party has the option to accept or reject. 4. A sales contract must be concluded when each share is acquired, even if the contract is only verbal. 5. The sale takes place at the market price at the time of sale, not at the apartment's value when the partnership was formed. It is not permissible to promise to buy the shares at their initial project value.

The International Islamic Fiqh Academy has approved the permissibility of Diminishing Musharakah, subject to certain conditions, including: A partnership between two parties in an income-generating project, where one party undertakes to gradually purchase the share of the other party. Its basis is a contract where each party contributes a share of the capital and shares in the profit, and bears the loss proportionate to their share. It is characterized by a binding promise from only one party, with the other having the option, along with concluding sales contracts upon acquiring each part. It is permissible for one party to rent their partner's share for a known rent. It requires adherence to the general rules of partnerships, that the selling price of the share be determined by the market value on the day of sale, not requiring one party to bear insurance or maintenance expenses alone, specifying profits as common percentages, separating contracts and obligations, and preventing the stipulation of a right to reclaim the contribution. It is necessary that the partnership does not stipulate buying and selling as a condition; rather, the partner undertakes this through a separate promise, and the buying and selling occur through a separate contract.