Acquisition Payment: The portion of the Purchaser’s monthly payment that is applied toward purchasing ownership from the Co-owner. This amount varies month by month in accordance with the agreed-upon schedule.

Asset: Anything that has commercial or exchange value that is owned by a business, institution, or individual.

Bai Muajal: Deferred payment sale, the same as murabaha.

Capital: Money in an investment.

Capital Gain: The increase in the value of your investment.

Capital Loss: The decrease in the value of your investment.

Closing: The signing of the documents and disbursement of funds necessary to complete the property acquisition and the Co-ownership transaction.

Closing Costs: Third-party charges related to the property acquisition or Co-Ownership transaction. These include fees for property appraisal, credit report, title search and abstract, flood certification and tax service, notary, and document preparation, title insurance premium, realtor commissions, state and local recording and transfer taxes, and attorney fees.

Co-owner: The investor that purchases a percentage of the property from a seller to facilitate the Purchaser’s acquisition of the property or to facilitate a Mortgage Replacement transaction.

Co-ownership Agreement:An agreement between the Purchaser and the Co-owner that reflects the duties of the parties to each other.

Darura: A necessity, or emergency. This is a condition in which aspects of the Sharia may be suspended in order to preserve life, or assure the safety of the Islamic community, or an individual.

Declining Balance Co-ownership Program: Islamic home acquisition transaction that uses the concept of declining balances to enable Muslims and others to acquire ownership in property in compliance with Sharia and with state and federal requirements – with a co-owner which gives immediate ownership of record to consumer and obligates the consumer to buy out the Co-owner.

Deferred Ownership Amount: The amount credited to the Purchaser each month to reflect each Acquisition Payment and the total of such amounts.

Fatwa: An Islamic legal opinion based upon Quran, Sunnah, and Islamic legal precedent – collectively the Sharia.

Fuqaha: Plural of faqih. Jurist trained in Islamic law or the Sharia in particular, according to the five leading teachers: Maalik, Abu Hanifa, Shafi'e, Ibn Hanbal, and Jaafar Siddiq.

Gharar: An exchange in which there is an element of deception, either through ignorance of the goods or the price, or through faulty description of the goods. For example, selling goods you are not in a position to deliver, such as a runaway horse, would be gharar.

Hadith: The sayings and reported examples of Prophet Muhammad.

Halal: Something acceptable under the Sharia.

Haram: Something forbidden under the Sharia.

Ijara: Leasing.

Maysir: Gambling or playing games of chance with the intention of making an easy, unearned profit; a form of gharar.

Monthly Payment: The total of Profit and Acquisition Payments paid by the Purchaser each month.

Mortgage Replacement: The process by which a Purchaser that already owns property replaces a traditional mortgage with a Declining Balance Co-ownership Agreement.

Mortgage Replacement Amount: The outstanding amount of the traditional mortgage payoff plus any additional funds available from the equity in the purchaser’s property.

Mudaraba (Trust Financing): Any transaction in which one party acts as the manager for the investors. The agent or mudarib may invest with funds, property, or effort as a means to earn a portion of the return or a share of the loss. The agent may also be paid a fee for time and diligence.

Murabaha (Cost-Plus Financing): Sales with a profit markup. This term has come to mean both spot and deferred payment sales in which Islamic banks engage.

Musharaka (Venture Capital): A partnership between two parties, both of whom provide capital towards the financing of a project. Both parties share profits on a preagreed ratio, but losses are shared on the basis of equity participation. Management of the project is carried out by both the parties.

Outstanding Mortgage Amount: The amount due to the old mortgage company to pay off the existing financing.

Partnership, shareholding: This most often reflects a joint stock company or a general partnership.

Preapproval Letter: A letter from Guidance indicating a positive initial assessment of the Purchaser’s financial capacity, used to support Purchaser’s offer on a residential property.

Profit Payment: The portion of the Monthly Payment that the Purchaser pays to the Co-owner for the Purchaser’s exclusive enjoyment and use of the whole property.

Purchase Price: The price for Property negotiated in a residential contract of sale.

Purchaser: A person who enters into a Residential Contract of Sale with a seller and into a Co-Ownership Agreement with the Co-owner. The Purchaser initially buys a percentage of the property and subsequently makes monthly Acquisition Payments to the Co-owner to acquire additional ownership interest in the property.
Residential Contract of Sale: The agreement under which Purchaser agrees to purchase a property from the seller.

Riba: An unjust return, such as that obtained through collecting interest.

Sharia: Islamic jurisprudence, based upon defined sources and methods of determining precedent. The primary source is the Quran. In order, the secondary sources include hadith (Sunnah), consensus, logical deduction and analogy, and past practice. Literally, a path to pure water.

Sharia Supervisory Board: The scholars responsible for insuring that products and operating procedures comply with the Islamic principles of Sharia.

Takaful: Arabic for solidarity. This term means mutual assurance or insurance under the Sharia.

Zakat: An annual, specified wealth tax to be paid to specific people by all Muslims possessing a minimum net worth above their basic needs. Literally, purifying dues.