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Land As Collateral

Is it lawful for the bank to sign an Istisna contract with a land-owning client for the purpose of developing the land, building on it and then selling the building to the client based on a Murabaha while holding the land as collateral until the client finishes making his payments?

It is permissible for the bank to enter into a contract of Istisna with its client for the purpose of developing land. Once the Istisna is concluded and the cost of the building becomes known, the cost will be the bank’s right over the client or buyer.
In case there is an agreement to defer payment, the bank will have the right to request the client to guarantee his payment of debt by offering the land as collateral.

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