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Is the buyer's deduction of "late payment penalties" from the company, from the remaining installments of the housing unit, considered a usurious transaction?

1 min readAlso available in العربية

It is permissible to stipulate a financial penalty (a penalty clause) on the seller if he delays in delivering the sold item, provided that this penalty is commensurate with the actual damage incurred by the buyer, excluding moral damage. The penalty clause may be stipulated in the contract or in a subsequent agreement. This is not considered usury as long as the buyer is the debtor, and the penalty clause is known to both parties and limited to the actual damage.

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

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