Ruling 2319
In a security agreement, a person deposits some property with another person as collateral for a debt or some property that he is responsible (ḍāmin) for so that in the event that he fails to pay off his debt or property, the other party can be compensated from the deposited property.
-Ayatullah Sistani, Practical Laws of Islam, Security (Rahn)[1]
It is necessary to note that at present, what is commonly known as ‘rahn’ among people [in some places] is not, in reality, ‘rahn’ [in its jurisprudential sense]. Rahn [in its jurisprudential sense] refers to the money that is given to the owner of a house as a loan (qarḍ) in return for use of the house as a place of residence. This act, if it takes place without rent (ijārah), is usury (ribā) and unlawful (ḥarām), and the person does not have the right to live in that house. If it takes place with rent, then, if giving the loan is conditional on the rent, it is again unlawful; and if the rent is on condition of the loan, then based on obligatory precaution (al‑iḥtiyāṭ al‑wājib) it is not permitted (jāʾiz). [Author]