Article 20 of the Saudi Finance Lease Law
المادة 20 من نظام الإيجار التمويلي
The lessee must hand the asset back to the lessor in the condition agreed in the contract when the contract ends, is terminated or its term expires, unless it chooses to own it under the contract.
Official text (Arabic)
This article has not been amended since the law was issued.
مـع مـراعـاة ما ورد في المـادة (التاسعة) من هذا النظام، يسلِّم المستأجـر الأصـل المـؤجَّـر - بالحالة المتفق عليها في العقد - إلى المؤجر عند إنهاء العقد أو انفساخه أو انقضاء مدته، ما لم يختر المستأجر امتلاك الأصل المؤجر بموجب العقد.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 20 explained in plain English
This article sets what the lessee must do at the end of the contractual relationship: hand the leased asset back to the lessor.
When must it be handed back? In three cases:
- When the contract is ended.
- When it is terminated.
- When its term expires.
In what condition? In the condition agreed in the contract. The contract is the reference for the condition in which the asset is returned, so the lessee would do well to review what was agreed on this.
The exception: the lessee is not bound to hand it back if it chooses to own the leased asset under the contract, that is, if the contract gives it that option and it exercised it.
The article begins with the phrase "subject to what is stated in Article 9", so the rule on handing back is applied subject to what Article 9 provides.
This article is linked to Article 21, which allows the lessor to stipulate a right to terminate the contract and recover the asset if the lessee fails to pay installments due as the Regulations determine, and to Article 19, which makes the lessor's ownership of the assets established against third parties by registering contracts. If the parties disagree on the condition of the asset on handing it back or on the right to own it, you can consult a lawyer specializing in banking, finance and finance lease cases.
Practical example
Salman leased a car for three years under a finance lease, and the contract gave him an option to own it at the end. When the term expired he decided not to own it, so he must hand the car back to the lessor company in the condition agreed in the contract. Had he chosen to own it under the contract, he would not have had to hand it back.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentBanking, Finance & Securities lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Banking, Finance & Securities lawyers
Lawyers who handle this kind of case
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Dr. Saleh Altayyar & Partners Law Firm
Frequently asked questions about Article 20 of the Saudi Finance Lease Law
Must I return the asset when the finance lease ends?
Yes, the lessee hands the asset back to the lessor when the contract ends, is terminated or its term expires, unless it chooses to own it under the contract.
In what condition must the leased asset be returned?
In the condition agreed in the contract.
Can I keep the asset instead of returning it?
Yes, if the lessee chooses to own the asset under the contract.
Articles this article refers to
More articles on Acquiring and Returning the Leased Asset
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.