2% registration fee demand illegal: Fatwas

Two Grand Muftis of Islamic Affairs and Charitable Activities Department have said that it is illegal by any bank to demand that customers pay the full 2 per cent registration fee for their residential units.

They said the law of the Land Department is the one which should be applicable. The law requires both buyer and seller to pay 1 per cent each towards the Land Department registration fee of 2 per cent of the sale price.

Recently, some investors in residential units financed under the Shariah-compliant Ijara system, said their Islamic bank is demanding that buyers pay the full 2 per cent registration fee for their apartments.

They said that the Ijara contract they had signed several years ago with the bank did not provide any specific percentage for the registration fee, which would be as is applicable under  the law at the time of registration. The law provides that the fees of 2 per cent be shared equally between the buyer and the seller.

Dr. Ali Ahmed Mashael, the Grand Mufti at Dubai Fatwa Department, said in his 'fatwa' that the property law applied by the Land Department has priority [over Ijara] as the Land Department in Dubai represents the competent authority concerned with such things.

Meanwhile, Dr. Ahmed Abdul Aziz Al Haddad, Grand Mufti and head of the Islamic Affairs Department, said that as long as the law of the Land Department has identified the percentage paid by the investor, the investor has the right to refuse payment of the fees set by the bank, which should adhere to the percentage set by the Land Department.

In case the seller (bank or developer) refused, the client has the right to file a lawsuit against them for exceeding the system to be followed.

The Grand Mufti of Dubai Dr Al Haddad added that if the client approved the request of the bank and dropped his right in writing by signing such a contract, then he has to accept his commitment, because the contract was signed between them by mutual consent.

If it [amount of registration fees] was not clear in the contract with the client, or the term was within the provisions of a contract which has no room for debate, then in such cases  the client has the right to  appeal before competent authorities, otherwise he is obliged to pay, he added.

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