A form of sale (bay’) in which the subject matter (mahall) is a right or concession to utilize some property for a preset price and a specific period of time. In return, the beneficiary or user (lessee, so to speak) pays a specific amount of money (rent or badal). In this sense, bay’ al-khulu is the sale of a usufruct (manfa’ah) that can be obtained from property, and hence it is a leasing contract. For example, a person may buy the right to utilize machinery in a leased factory for a given number of years. The seller will give the buyer access to the machinery in return for badal (or badal al-khulu).
Technically, al-khulu is Arabic for key money. Literally, it means “evacuation”. Bay’ al-khulu translates as sale of right or sale of concession.
