Is a Builder Allowed to Take on a Construction Project When the Client Is Financing It Through an Interest-Based Bank Loan?
Question
A brother in construction is asking: if he knows or is almost certain that his client is obtaining an interest-based loan from a conventional bank to finance the construction, is it permissible for him to take on the project? The client uses the loan money to pay the builder, and the builder may provide estimates or reports for the bank to release funds, but he does not sign anything with the bank. Is this permissible, or is it similar to being paid from a fully haram source like alcohol income?
Answer
Alhamdulillah, wassalatu wassalamu ala rasulillah, wa ala alihi wa sahbihi ajmain.
1. The Shar‘i Context
Riba is a major sin, and whoever signs, pays, receives, or directly participates in it is accountable. Yet Islamic law distinguishes clearly between:
- Entering the haram contract itself, and
- Entering a separate, independent, halal contract with someone who committed a sin elsewhere.
This distinction is fundamental in determining whether a builder is implicated in the client’s riba-based financing.
2. Application to the Builder’s Situation
The situation here consists of two completely separate contracts:
- The client and the bank sign an interest-based loan (haram).
- The builder and the client sign a construction/sale contract (halal).
The builder does not become part of the riba transaction simply because the client uses that money to pay him.
The builder:
- Does not sign any bank documents
- Is not a guarantor
- Is not a witness to the loan
- Does not receive interest
- Only signs a normal construction contract with clear work and clear price
Therefore, he is not participating in the riba contract at all.
3. Supporting Evidences
First: Usul Principle
الحرام لا يتعدى ذمتين
A sin does not transfer from one person’s liability to another.
This maxim means:
- If one person enters a haram contract, the sin is on him.
- Another person who enters a separate, lawful transaction with him is not burdened by that sin.
Here, the riba liability belongs only to the client and the bank, not the builder.
Second: The Prophet’s Dealings with People Whose Wealth Included Riba
The Prophet صلى الله عليه وسلم bought food on credit from a Jew and mortgaged his armor with him, even though Jews practiced riba.
The critical point is:
- The specific transaction the Prophet entered was valid and free of riba.
By analogy:
- The builder’s contract with the client is a halal construction/sale agreement.
- The client’s funding source does not affect the validity of the builder’s contract.
This is not like selling directly to someone whose business itself is haram (e.g., alcohol).
Here, the haram act is external to the builder and separate from his contract.
Third: The Builder Is Not Assisting the Riba Contract
Providing:
- Estimates,
- Construction budgets,
- Work progress reports
…for the client does not constitute assisting the riba contract itself.
These documents are part of the builder’s normal work, and the client may use them however he wishes.
The builder is not drafting, negotiating, or supporting the interest contract.
4. Final Ruling
As long as:
- The builder’s contract with the client is halal (clear price, clear work, no interest clauses), and
- The builder has no direct involvement in the client’s loan (no co-signing, no guaranteeing, no signing with the bank),
then it is permissible for the builder to proceed with the project.
The sin of riba belongs solely to the party who signed the interest-based loan—the client.
The builder’s income remains halal, and his contract is valid.
And Allah knows best.