It therefore resolves the following:

First: Agreements on badal al-khuluw (key money) fall into four categories:

1. An agreement between the property owner and the tenant at the outset of the lease.
2. An agreement between the tenant and the owner during the lease term or after it has ended.
3. An agreement between the tenant and a new tenant during the lease term or after it has ended.
4. An agreement among the new tenant, the owner, and the original tenant, whether before or after the lease term expires.

Second: If the owner and the tenant agree that the tenant will pay the owner a lump sum, over and above the periodic rent—called khuluw in some countries—there is no Sharia objection to paying this lump sum, provided it is treated as part of the rent for the agreed period; if the lease is terminated, the rules governing rent apply to this amount.

Third: If, during the lease term, the owner and the tenant agree that the owner will pay the tenant a sum of money in return for the tenant’s relinquishment of his contractually established right to the benefit of the remaining term, this constitutes a Sharia-compliant form of badal al-khuluw, since it compensates the tenant—by his own choice—for surrendering the benefit, which he has effectively sold back to the owner. However, if the lease term has expired and the contract is not renewed, whether explicitly or implicitly through automatic renewal in a legally effective manner, badal al-khuluw is not permissible, for the owner has the stronger claim to his property once the tenant’s right has lapsed.

Fourth: If, during the lease term, the original tenant and a new tenant agree that the latter will take over the remainder of the lease in return for a payment exceeding the periodic rent, such badal al-khuluw is likewise permissible, provided that the stipulations of the lease contract are observed