I work for a property management company, and we are in the process of selling a small apartment complex. Apparently, one of the buyers (or investors, I’m not sure) is a Muslim man (yes, this makes a difference). We have had two closing dates set and been postponed twice. Our primary buyer contact says there’s a problem with the closing. Due to his partner/investor’s “religious beliefs,” the buyers must not incur closing costs. The Muslim man has said that he cannot be involved in financial transactions that incur interest or other fees. At least, this is the reason we’re being given for the postponement of the closing. (I can’t imagine that they’re going to fork over the full selling price at the closing, so it sounds a little … fishy to me.) This seems really strange to me, since when we met the Muslim man, he was introduced as the renovation project manager, and nothing else. (Although he could really be the Man with the Money, and we just weren’t told that. Whatever.)
Now, I know next to nothing about any branch of Islam, so I decided to come to you, dear Dopers, for some help. Is this a legitimate religious restriction, or are they being less-than-honest?
Islam does prohibit financial transactions involving interest. (I don’t know if closing costs would really be an issue, though. Those are usually just service fees and taxes.) There are financial institutions that provide Islam-compatible mortgages, where there is a lease-type arrangement in lieu of interest on the loan.
That’s true but it should be noted that many Muslims living in Western countries do live with reality of interest in some respects; I have a Muslim friend at work who, in response to this very question, said “Of course, we have a mortgage on our house. Not much of a choice there; it was that or not have a house.”
It still sounds a little funny, though. I know they’re not going to write a check for the purchase price of the complex at closing. (At least, I don’t think they will. If so, we should have one heck of a party after the closing! :p)
Some banks in the U.S. have worked out ways to enable muslims to invest in property without a violation in their beliefs. It’s a lease-to-own sort of arrangement.
This article (from Michigan’s state government website) may help explain a little more.