Article 15 of the Saudi Finance Lease Law

This article protects the lessee from the effect of the lessor's dealing with the asset. The lessor owns the asset, and may sell it to another party during the contract's term, so the question is: what happens to the lessee's contract?

The article answers that ownership of the asset passes to the buyer burdened with the contract. "Burdened with the contract" means the contract does not fall away on the sale, but the asset passes to the new owner with this contract on it, so the contract remains in place and effective against the new owner.

In practice this means:

• The lessee may not rely on the sale to stop performing its obligations in the contract.
• The buyer cannot ignore the existing contract merely because it has become the owner.

The article thus brings stability to both parties: the lessor can deal with its property, and the lessee can rely on its contract continuing.

This article is linked to Article 16, which is its counterpart from the lessee's side, since it prevents the lessee from creating rights over the ownership of the asset or mortgaging it to a third party except with the lessor's written consent. It is also linked to Article 14, which makes the lessee responsible for damage resulting from its use of the asset, a responsibility not affected by a change of owner. If a dispute arises with the new owner over performing the contract, you can consult a lawyer specializing in banking, finance and finance lease cases.