LARIBA claims to follow the Diminishing Mushāraka model, which is an Islamic financing structure based on gradual ownership transfer. However, one of the fundamental principles of the Diminishing Mushāraka model is that there must be real and actual co-ownership of the property or asset. This means that both parties—the financial institution and the client—must jointly purchase the property at the outset and share ownership in a legally recognized and enforceable manner.

However, based on the information available—including what is mentioned on their website—LARIBA only conceptually claims joint ownership with the client.^[1] In practice, the joint purchase does not actually take place. Instead, the client alone purchases the property and registers it in their own name, while LARIBA retains a claim to the usufruct (ḥaqq al-manfaʿa).

Islamic finance does not recognize conceptual or theoretical ownership. In a valid Islamic partnership, ownership must be real and legally binding. Both parties must share liability for their respective ownership stakes.^[2] In contrast, if a financial institution does not actually purchase the property but merely claims an interest in its usufruct, it is not a true partnership but rather a disguised loan arrangement. If LARIBA does not actually acquire ownership before selling its share to the client, then the transaction fails to meet the fundamental requirements of a Diminishing Mushāraka contract. Instead, it resembles a conventional mortgage with different terminology, undermining its claim of being Sharia-compliant.

And Allah knows best. 

Mf. Zeshan Ahmed
Senior Assistant Mufti, Darul Iftaa Chicago

Checked and Approved:

Mf. Abrar Mirza
Head Mufti, Darul Iftaa Chicago