Question Summary:
Is Zeromortgage Shariah Compliant?

Question Detail:

Assalamualiyuk
I would like your opinion on the new Islamic financing called zero mortgage (zero mortgage.ca). It has been certified as shariah compliant by a few scholars but I would really like your opinion on it. I have always followed your question and answers on this site and take mufti Ibrahim desis word very highly. Would it be possible for you to look at their guiding principles and let me know your opinion if it is shariah compliant or not. Also what specific reasons would u consider it to be not so.. I would very much appreciate it.
Jazakallah

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh
We have browsed through the Zero website. We understand that the Declining Balance Co-Ownership Home Acquisition Program of Zero is based on the concept of Musharakah Muntaqisah (Diminishing Musharakah). Therefore all the rules and laws of Diminishing Musharakah will be applicable. We understand that the financier and customer jointly own the asset. The customer pays monthly rental for the financier’s portion of the asset while making regular payments for the purchase of the financier’s portion of the asset until purchasing the asset outright.
In principle, the concept in general is Shariah Compliant. However we cannot issue a specific ruling until we receive the underlying documentation and terms and conditions of the contract. Furthermore we need to understand how the home insurance is fixed to the contract and what is the Shariah flow of funds for the product? Also what happens if the client decides not to buy the financier’s share in the asset? Is he legally bound to do so in terms of the law and Shariah?
 
And Allah Ta’āla Knows Best
Ismail Desai,
Darul Iftaa