Sayyiduna Hakeem ibn Hizaam Radiyallahu anhu reported that Rasulullah sallallahu alayhi wa sallam said, “The two parties to a transaction have the option (of cancelling it) until they part. If they are honest and disclose any defects, their transaction will be blessed, but if they lie and conceal defects, the blessing of their transaction will be erased.” [Sahih Muslim]
Question:
There are a few partners in a business. One of the partners passed away. Do the heirs of the deceased partner automatically become partners in the business?
Similarly, if a few partners jointly own a building from which they earn rental income, and one of them passes away, will his heirs automatically become partners in the building?
Answer:
A. The scenarios mentioned in the query above relate to two different types of partnerships:
a) Business Partnership ( شركة فى العقد )
In principle, when a partner in a joint business enterprise passes away, his partnership is terminated. The heirs do not automatically assume his position as partners in the business. Instead, they are entitled to receive a payout equivalent to the deceased’s share in the business.
However, the heirs may mutually agree with the surviving partners to continue the partnership, either under the same terms and conditions as those of the deceased, or under revised terms. [Shaami 4/327]
If there are more than two partners, the partnership between the surviving partners remains unaffected by the death of one partner.
b) Partnership/Joint Ownership in Property ( شركة فى الملك )
In the case of jointly owned property, the deceased partner’s share automatically transfers to his heirs. They are entitled to both ownership and the rental income generated from their inherited share of the property.
And Allah Ta’ala Knows Best
Mufti Muhammed Hamza Farooqui
Mufti Taahir Hansa
Fatwa Department
Jamiatul Ulama (KZN)
(The answer hereby given is specifically based on the question asked and should be read together with the question asked. Islamic rulings on this Q&A newsletter are answered in accordance to the Hanafi Fiqh unless otherwise stated.)