Pledge/Mortgage/Pawn = Al-Rahn

Literally: a detained thing

Technically: “detention of a corporeal property on account of
a claim such as a debt which may be satisfied out of that
property”.
- Legality:
- The Quran says:
- “If you are on a journey, and cannot find a scribe, a pledge
with possession (may serve the purpose).And if one of you
deposits a thing on trust with another, let the trustee
(faithfully) discharges his trust, and let him fear his Lord”.
(2:283)
- The Prophet (pbuh) in a bargain made with a Jew for grain,
gave his coat of mail in pledge for the payment.
- Zahiris: pledge is allowed only:
a) In journeys
b) No possibility to get a written agreement
c) No witnesses
- Majority: anytime and in any situation
- Pledge is convenient when:
a) two parties cannot trust each other
b) cannot get a written agreement
c) No witnesses are available
- Pledge secures the right of the lender who will be given
priority over other lenders and other subsequent lenders
with whom the same property is pledged (ex: one big
house is pledged with several lenders but the first one is
given priority).
 The pillars of pledge/Rahn
1) Two parties: pledgor (al-Rahin) and pledgee (al-Murtahin)
2) The pledged property (al-Marhun)
3) The debt (al-marhun bihi).
4) Expression (offer and acceptance).
Conditions:
1) The pledged property should be known and well-defined.
2) Existence of the pledged property at the time of contract
(ex: pledge of an unborn animal is not valid; unripe
fruits…)
3) Deliverability of the pledged property .
4) It should be a valuable property (mutaqawwim) (ex:
haram properties or properties that cannot be possessed
is not valid).
5) Usufruct cannot be a pledge.
- Hanafees: because it is not property
- Majority: though it can be sometimes a property but not in
this situation.
6) Conjoined property with another property cannot be
pledged separately (ex: crops and trees without the land)
7) The pledgor should have full ownership of the pledged
property except in case a guardian who may pledge the
property of a minor for the debt of a minor or a father for
his own debt.
8) The pledged property should be capable of coming into the
possession of the pledgee.
9) The value of the pledged property should be equal or more
than the amount of debt.
 The Use of Pledge by the Pledgee
- The pledge is considered a trust in the hands of the
pledgee.
- Pledgee is responsible for its safety otherwise he is liable
for compensation.
- Pledge is given to secure the debt, therefore, it is not
meant for investment and profitable use.
- Pledgee is not allowed to exploit or use the pledged
property even with the permission of the pledgor except
with compensation.
- Exploitation and profitable use of the pledge is considered
usury.
- But if it is an animal that can be used for riding or milk, the
pledgee may make use of it in return for its maintenance.
 Rights and Responsibilities of the Pledgee
1) The pledge is kept with the pledgee until the debt is paid.
2) The pledgee may demand payment of his debt.
3) The pledgee is not allowed to let or hire the pledge to
someone else.
4) The pledge must be returned upon receiving the payment.
5) In case if the pledgor refuses to spend on the pledge, the
pledgee may do so with the permission of the court and
reclaim that from the pledgor (ex: breeding pledged
animal…)
6) The pledged property cannot be sold without consent of
the pledgor.
 Rights and Responsibilities of the Pledgor
1) The pledgor is not allowed, to retake his pledge
before settlement of his debt.
2) The pledgor cannot reclaim the pledge on the plea
of selling it to discharge his debt.
3) The pledgor cannot reclaim the pledge on the
ground of partial settlement of the debt.
4) The pledgor has to pay for the maintenance of the
pledge.
5) The produce and the benefit of the pledge belong
to the pledgor.
 Forfeiture of the Pledged Property
- The pledge can not be forfeited. The hadith states: “The
pledge is not forfeited, to the pledgor is returned his profit
and the pledgee is held responsible for its loss”.
- The pledgor has to settle the debt within the fixed time.
- If the pledgor refuses to pay and also does not allow to sell
it, the court may force him either to settle the debt or to
allow the sale of the pledge.
- Balance of the sold pledge belong to the pledgor. But if it
is not enough the pledgor has to settle the balance.
- The pledged preperty is inherited by heirs of the pledgee
- If the pledgor dies the contract is dissolved automatically
and the debt is payable immediately from the estate of the
deceased pledgor.