Ijarah
A lease agreement where the lessor rents an asset to the lessee for a specified period.
Overview
Ijarah is similar to a conventional lease. The owner of the asset transfers the usufruct (right to use) to another person for an agreed period, at an agreed consideration. The lessor remains responsible for the maintenance of the asset.
Common Applications
- Equipment leasing
- Property rental
- Vehicle leasing
Key Features
- Lessor maintains ownership of the asset
- Lessee pays for the right to use the asset
- Lessor responsible for structural maintenance
- Can include an option to purchase (Ijarah wa Iqtina)