What is the ruling of Sharia regarding the inclusion of two conditions in a contract for the purchase of an apartment under construction: one stipulating a 10% penalty on overdue amounts in case of delayed payment, and another for the annulment of the contract and deduction of 30% of the total amount paid if payment is not made after a warning? And does this fall under usury (riba)?
Source: FtawySummary from Ftawy's records · added here Sep 2, 2026
One who is late in paying a debt is either a procrastinator, in which case his matter is referred to the courts, or he is in straitened circumstances, in which case he must be granted a delay, and it is commendable to give him charity by waiving the debt. Stipulating a late payment penalty, whether 10% or 30% deducted from the amount paid, is a form of pre-Islamic usury (riba al-Jahiliyyah) that is forbidden by Islamic law. Allah has warned those who engage in it of war. Therefore, the condition of a late payment penalty in the contract is void, and it must be cancelled or the contract rescinded.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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