“Musharakah in this case refers to an agreement in which the PHFCL and the customer jointly purchase a property creating Shirkat-ul-Milk and become co-owners in proportion to their contribution towards the purchase price and ownership related expenses”
“Ijarah is a lease contract in which usufruct of an asset is transferred to the lessee for a specific period in consideration of an agreed rental.’’
In essence, the Musharakah cum Ijarah product involves PHFCL and the customer forming a Musharakah to jointly purchase and co-own the property and then PHFCL rent out its share on the bases of Ijarah contract /Rental Agreement in the property to the customer for a pre-specified term and against pre-agreed rentals/installments.
Once the Musharakah Agreement is signed between the co-owners, the active relationship between the two co-owners will be that of Musharakah Partners relationship with all its implications and consequences. However, in case of total loss or non-repairable partial loss or default by customer, the Payment/Rental Agreement shall be terminated and the Musharakah rules will apply.