01 / 38 · Law & paper · Default
When they take the house.
Default is the clause that decides whether you signed a partnership or a loan. Possession, residual equity, and the Financial Ombudsman are not footnotes.
The Mizan desk · 7 September 2026 · 10 min
On a mortgage, default leads toward possession of an asset that always belonged to you, charged to the lender. On a true co-ownership plan, the bank already owns a share. Sale of the asset, split of proceeds according to shares, costs off the top — that is the shape. If default lets them treat the whole house as collateral for a debt, the day-one ownership story was marketing.
A partner who can take 100% on a missed debit is not a partner.
Charity, penalty, Ombudsman
Late payment on an Islamic book is supposed to be an admin cost or a charity payment, not a compounding coupon. If the clause enriches the bank as interest would, you have found the loan. The Financial Ombudsman Service still sits over UK-regulated home finance. An HPP is not a private club outside FOS because the recital mentions Shariah.
Read this beside if-the-house-burns. Destruction and default are the two tests a cash-flow chart will not sit. Ask who can instruct a sale, who gets residual equity, and whether a payment arrangement is a new riba or a revision of rent and units.