Under what conditions is taking collateral (rahn) required when loaning an orphan's money?
Chapter on Selling the Musarrah (Animal with milk retained in udder)
Al-Mughni
Book of Sales
Primary text
Every situation where loaning the orphan's money is permitted requires the borrower to be solvent and trustworthy to secure against default and inability to repay. It is preferable for the guardian to take collateral if possible. If taking collateral is not possible, it may be left aside, according to the apparent view of Imam Ahmad, because stipulating collateral might prevent the realization of the intended benefit for the orphan, as the person willing to borrow for the orphan's benefit might refuse to provide collateral. Imam Ahmad's view implies that collateral is not strictly required in all cases when the loan serves the orphan's interest.
Supporting text
Abu al-Khattab stated that the loan should only be given if collateral is taken, prioritizing the protection of the wealth against denial of debt or delay in payment. If collateral can be taken, it should be taken as a safeguard. If it is left aside, there is a possibility the guardian becomes liable for loss due to negligence, though another view suggests no liability because the apparent trustworthiness of the borrower suggests the money is safe.