Can the guardian of an orphan pledge the orphan's property as collateral for a loan?
General Chapter
Al-Mughni
Book of Pledges (Collateral)
Primary text
The guardian of an orphan is not permitted to pledge the orphan's property unless two conditions are met. The first condition is that the collateral must be deposited with a trustworthy person to prevent its denial or misuse leading to its loss. The second condition is that the guardian must have a benefit or need for the loan, such as the necessity for sustenance, clothing, maintenance of damaged property, land, or livestock, provided that the orphan's wealth is absent but expected (like a returning asset, an anticipated yield, or a deferred debt that is due), or if there is slow-moving merchandise whose sale is hoped for. Under these circumstances, the guardian may borrow and pledge the property.
Supporting text
If there is nothing awaited, the guardian has no justification for borrowing; instead, they must sell a part of the orphan's principal assets and use the proceeds for maintenance. If the guardian cannot find someone to lend to, but can find someone to sell goods to on credit (credit sale, *nasi'ah*), and this credit sale is more beneficial than selling the principal asset, it is permissible to acquire the goods on credit and pledge other assets of the orphan. This ruling applies equally to the executor (*Wasi*), the judge (*Hakim*), and the trustee. The father is also included, though there is a difference of opinion: one narration states the father may pledge property from himself for his son, and from his son for himself, but not for others.