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Rulings On Title Of Ownership Of Leased Assets

What is the ruling regarding the title of ownership of the leased asset?

Upon acquiring an asset, particularly for the purpose of an Ijarah Muntahayya bi Tamleek, the bank assumes the title of ownership. When the lease expires, the ownership of the goods and their title is transferred to the client. In certain cases, the asset may be registered in the name of the lessee early in the contract. This may be done for regulatory reasons or to make use of available exemptions. In such a case, a counter- bond is taken from the lessee to authenticate actual ownership. The bank, as the owner, is responsible for the asset throughout the period of the lease. The client merely possesses the legal title of ownership for purposes of practicality alone. The insurance of leased goods is an ownership related cost and is the lessor’s responsibility throughout the period of the contract.

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