Article 7 of the Saudi Finance Lease Law
المادة 7 من نظام الإيجار التمويلي
The article obliges the lessee to ordinary use and operational maintenance at its own cost, puts essential maintenance on the lessor unless agreed otherwise, and requires notice of events affecting benefit.
Official text (Arabic)
This article has not been amended since the law was issued.
1 - يلتزم المستأجر باستعمال الأصل المؤجر في الأغراض المتفق عليها في حدود الاستعمال المعتاد، ويكون مسؤولًا عن القيام بأعمال الصيانة التشغيلية على نفقته وفق الأصول الفنية المتبعة.
أما الصيانة الأساسية فإنها تلزم المؤجر، ما لم يتفق الطرفان على التزام المستأجر بها، وتكون حينئذ فيما ينشأ عن استخدام المستأجر للأصل دون ما يكون ناشئًا من خلل أو عيب في الأصل المؤجر.
2 - يلتزم المستأجر بإشعار المؤجر (على عنوانه) بما يطرأ على الأصل المؤجر من عوارض تمنع الانتفاع به كليًّا أو جزئيًّا فور حدوثها، وفق ما تحدده اللائحة.
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 7 explained in plain English
This article regulates the lessee's obligations in using and caring for the asset, and divides maintenance between the parties:
- Use: the lessee must use the asset for the agreed purposes and within ordinary use.
- Operational maintenance is on the lessee: it carries it out at its own cost in accordance with accepted technical standards. Article 1 defines it as the maintenance the asset needs to continue its benefit according to custom.
- Essential maintenance is on the lessor: under Article 1 this is what the survival of the asset itself depends on according to custom. The parties may agree that the lessee bears it, but its obligation is then limited to what arises from its use of the asset, and does not include what arises from a defect or flaw in the leased asset itself.
- Notice: the lessee must notify the lessor, at its address, of events affecting the asset that prevent benefit from it in whole or in part, immediately when they occur, as the Regulations determine.
Immediate notice matters because Article 6 requires the lessee to pay the rent even if it does not benefit from the asset, unless the lack of benefit is due to the lessor. Article 8 also prevents the lessee from making any change or modification to the asset without the lessor's written consent, so maintenance should not be confused with modification. If there is a dispute over the type of maintenance or who bears it, you can consult a lawyer specializing in banking, finance and finance lease cases.
Practical example
A restaurant in Khobar leased kitchen equipment under a finance lease. Changing filters and periodic cleaning is on the restaurant and at its cost. Then a manufacturing defect appeared in one refrigerator that threatens its survival; this is essential maintenance on the lessor, and even if the contract had put it on the restaurant, that would not include what arose from a defect in the asset. The restaurant must notify the lessor of the breakdown as soon as it occurs.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 7 of the Saudi Finance Lease Law
Who bears maintenance of the asset in a finance lease?
Operational maintenance is on the lessee at its cost, and essential maintenance is on the lessor unless the parties agree that the lessee bears it.
If we agree that essential maintenance is on me, do I bear manufacturing defects?
No, the lessee's obligation is then limited to what arises from its use of the asset, not what arises from a defect or flaw in the leased asset.
Must I tell the lessor if the asset breaks down?
Yes, the lessee must notify the lessor at its address immediately when anything occurs that prevents benefit in whole or in part, as the Regulations determine.
More articles on Maintenance of the Leased Asset and Lessee's Duties
- Article 8
The article prevents the lessee from making any change or modification to the leased asset without the lessor's written consent stating its nature, scope and who bears its cost.
لا يجوز للمستأجر إجراء أي تغيير أو تعديل في الأصل المؤجر دون موافقة محررة من المؤجر، تتضمن طبيعة التغيير أو التعديل، ونطاقه، والمسؤول عن كلفته.
- Article 13
The article allows the lessee to apply for a license to acquire or operate the asset on the strength of the registered contract, and makes the lessee bear the license fees and renewal unless agreed otherwise.
1- إذا كان اقتناء محل العقد أو تشغيله أو تسييره يستلزم رخصة، فلمستأجره أن يتقدم إلى الجهة المختصة بطلب الحصول على هذه الرخصة، استنادًا إلى العقد المسجل وفقًا لأ
- Article 14
The article makes the lessee responsible for damage resulting from its use of the leased asset.
يتحمل المستأجر المسؤولية عن الأضرار الناتجة من استخدامه الأصل المؤجر.
- Article 16
The article prevents the lessee from creating rights over ownership of the leased asset or mortgaging it to a third party except with the lessor's written consent.
لا يجوز للمستأجر ترتيب حقوق على ملكية الأصل، أو رهنه لطرف ثالث إلا بموافقة محررة من المؤجر.
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.