Inheritance of a person whose property was earned from Riba
14-5-2008 | IslamWeb
Question:
Assalamaliekum wa RahmatAllah wa Barakatahu my great grandfather used to lend money to people on interest keeping a part of their farm land as surety. some of the property was confiscated because the person could not pay back the amount. my grandfather inherited this property but was highly opposed to this practice but did not take any steps to return the property to such people. he used it for agricultural purposes. now part of this property has passed down to my father. is this property halal for us. it is difficult to find out to whom this property belongs since we do not have any written records for the same. please answer.
Answer:
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
If the mortgagee confiscates the mortgage just because the mortgagor is unable to repay his debts then this is taking people’s money by force without any right. Even though the purpose of the mortgage is for the creditor to get his debts from the mortgagor when he is unable to repay or when he procrastinates, the mortgage should not be confiscated or sold just because of this. When the dead line of repaying the instalments comes and the mortgagor does not repay his debts, then the mortgagee may take the matter to the Muslim ruler who will oblige the debtor to pay his debts. If the latter has no money to repay, the judge would order the mortgage to be sold and then pay the debts. Then, if the price of the mortgage is equal to the debts then the problem is solved. But if it is less, the debtor has to pay the creditor the balance. If the price of the mortgage is greater, the creditor should take his right and give back whatever remains of it to the debtor who is the owner of the mortgage.
However, if a person lends money with Riba (interest and/or usury) and disposes of the mortgages the way he wants, then this is a great sin.
Such behaviour of the mortgagee does not lead to any religious ruling, like the ownership of the mortgage being transferred from the mortgagor to the mortgagee.
If the mortgagee dies and his heir knows of these mortgages, he is not permitted to own them or benefit from them; rather, he is obliged to look for their owners and ask them to pay the debts without any Riba. If they do not pay, then the matter of the mortgage should be taken to the judge.
In case the heir is unable to know the owners of the mortgages, and he tried to find them or their heirs but in vain, then in this case the heir may sell them and take the debts from it and then give in charity whatever remains of it while intending the reward for the orginal owners of the mortgages.
Imaam Ahmad 
issued a Fatwa about a mortgage which remains with the mortgagee for several years while he is unable to find its owner saying that he should sell it and give in charity whatever remains of deducting the amount of the debt.
Allaah Knows best.