Establishment
Customers are appointed by the financier as their purchasing agent (Wakala Agreement).
As the customer is purchasing the property on behalf of the financier, as its agent, the financier has a beneficial interest in the property, reflected by the mortgage caveat placed on the title of the property.
The financier, being the owner of the property, leases it to the customer, on the terms set out in the Ijara finance facility agreement, stipulating Ijara term, frequency of payment, and Ijara rate.
Maintenance
During the term of the Ijara, customer has a proprietorial interest in the property whereby they:
-
have custody of the property
-
have full use of the property.
-
are responsible for property maintenance and protection (through insurance)
-
must meet all terms of the Ijara finance facility agreement.
Discharge
The customer may discharge themselves from the Ijara finance facility agreement at the following stages:
-
At the end of the agreed Ijara term
If all obligations under the Ijara finance facility agreement have been fulfilled by the customer, the financier will sell the property to the customer for a token sum (e.g., $100). The property will then be in the unencumbered possession of the customer.
-
During the Ijara term
If the customer seeks to discharge the Ijara finance facility agreement at any point during the Ijara term (due to their intention to sell or refinance for example), they may do so by settling the Exercise Price with the financer. The Exercise Price is the total of the outstanding finance amount, outstanding Ijara owing until the discharge date, and any relevant legal costs. Upon payment of the Exercise Price, the financier will sell the property to the customer for a token sum (e.g., $100). The financier’s encumbrances will be removed from the property.
The accepted and preferred Islamic method of financing adopted by Hejaz is Ijara Muntahiya bi Tamleek, considering the various Australian credit regulations, consumer protection provisions, and taxation mechanisms. This method of financing has been endorsed by AAOIFI and forms part of their globally recognised Sharia standards, as the principles of Ijara are drawn from the traditional Islamic sacred scriptures and interpreted for application in the context of the Australian law.
For almost a decade, the Hejaz Group has received Sharia certification from an Internationally renowned Sharia Board, Global Islamic Financial Services (GIFS). GIFS are engaged to ensure that all of Hejaz’s products, agreements, and contracts, as well as operational business processes, are aligned with Sharia principles. The GIFS Board comprises of Islamic scholars, Muftis, Islamic Finance experts, and lawyers. Their expertise is sought in the formulation and creation of new products and then extends to ongoing review of Sharia compliance through a semi-annual Sharia audit to ensure that Sharia principles and practices are being upheld.