Non-refundable Deposits

Jul 19, 2021 | Financial Transactions

Q: I own a car dealership and sometimes I take a non-refundable deposit from the buyer to ensure the time spent on reserving the car for the potential buyer is not wasted, is this type of deposit permissible?


Umar bin Shu’ayb narrated from his father who narrated from his grandfather who said, “The Prophet ﷺ prohibited the sale that has a non-refundable deposit (al-‘urbān)”

(Ahmad, 6723; Abu Dawud, 3502; Ibn Majah, 2193; Malik in Al-Muwatta, 1271)

Al-Imam Ali bin al-Husayn al-Sughdi (d. 461 AH) mentions whilst listing out 30 corrupted and prohibited transactions:

“Number 22: A sale that has a non-refundable deposit (‘Urbān). It is that a man will buy a commodity and pay some dirhams to the seller on the condition that if he takes the commodity then the dirhams are from the final payment and if he does not take it then the seller keeps the dirhams.”

(Al-Nutaf fi al-Fatawā, Chapter of Corrupt Transactions [1/473])


Imam al-Zarqani (d. 1122 AH) says in his commentary on al-Muwatta:
“It (‘urbān) is invalid with the jurists because of what it contains of a condition, deception, and consuming people’s wealth with falsehood.”

(Sharh al-Muwatta, Chapter of a Sale with a Non-refundable Deposit “al-‘urbān” [3/251])


Imam al-Nawawi says:

“We already mentioned that our school is that it is invalid if the condition is in the contract itself and Ibn al-Mundhir has narrated it from Ibn Abbas, al-Hasan, Malik, and Abu Hanifah. He said, ‘it is similar to the position of al-Shafi’i’.”

(Al-Majmu’ Sharh al-Muhadhdhab, Chapter on the Prohibition of a Deceptive Sale [9/335])


Nafi’ bin Abdul Harith narrated that he purchased a property to use as a prison in Mecca from Safwan bin Umayyah on behalf of ‘Umar (May Allah be pleased with all of them) on the condition that if Umar is pleased with it then the sale is his and if not then Safwan can have 400 dinars.

(Al-Bukhari [annotation in Chapter of Imprisonment in the Sanctuary])

It was narrated from Zayd bin Aslam that he asked the Prophet ﷺ about a sale that has a non-refundable deposit “al-‘urbān” and he permitted it.

(Musannaf Ibn Abu Shaybah [23656])

Imam Ibn al-Qayyim mentioned:

“He said (Imam Ahmad) in the narration of al-Maymuni, “There is no harm in al-‘urbun” and in the narration of al-Athram, “It was said that the Prophet ﷺ prohibited the sale that has a non-refundable deposit “al-‘urbān” and he (Ahmad) said, “It is nothing.” Ahmad used as a proof what Nafi’ bin Abdul Harith narrated from Umar. Al-Athram said, “I said to Ahmad, ‘Is that what is said?’ he said, ‘What can I say!? This is Umar may Allah be pleased with him.”

(Bada’i al-Fawa’id, Section of Prolixity in a Reply [4/84])

Answered by Shaykh Bilal Brown


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