A form of sale (ba’i) 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, ba’i 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 (بيع الخلو) for key money. Literally, it means “evacuation”. Ba’i al-khulu translates as sale of right to occupy or sale of concession.
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