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Permissibility Of Maintaining Asset As Security In Contracts
It is permissible to stipulate that the client furnish a security to ensure payment for debt whenever it becomes due. This security may be in the form of an asset. The prerequisites that need to be met for the asset to be maintained as a security are the following: A pledged asset must be of value and be Islamically lawful to own, use, or sell. All its specifications must be clearly defined and it should be deliverable to the creditor. If a property held in common is pledged, then it is necessary that the percentage of pledge be clearly specified. • It is permissible to grant more than one pledge on the same property. These pledges rank equally if registered on the same date. The recovery of debt from the value of the pledges may take place on a pro-rata basis . If the pledges are registered at different times then the prio...

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