Article 10 of the Saudi Off-Plan Real Estate Sales and Leasing Law
المادة 10 من نظام بيع وتأجير مشروعات عقارية على الخارطة
The article dedicates the escrow account to spending on the licensed project only, bars attachment of its funds for the developer's creditors, and requires any project financing to be deposited in it.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يكون حساب الضمان مخصصًا لأغراض الصرف على المشروع العقاري المرخص له فقط، ولا يجوز الحجز على المبالغ المودعة فيه لمصلحة دائني المطور.
2- إذا حصل المطور أو مالك الأرض على تمويل للمشروع العقاري المرخص له، فيجب إيداعه في حساب الضمان، ويكون التصرف بمبلغ التمويل وفقًا لأحكام النظام واللائحة.
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 10 explained in plain English
This article sets the purpose of the escrow account and its protection, in two paragraphs:
Paragraph (1): dedication and the bar on attachment
- The escrow account is dedicated to spending on the licensed real estate project only, so it is not used for any other purpose.
- The amounts deposited in it may not be attached for the benefit of the developer's creditors. If the developer owes debts to other parties, they cannot attach the funds of this account.
Paragraph (2): depositing financing
- If the developer or the landowner obtains financing for the licensed real estate project, it must be deposited in the escrow account.
- The financing amount is dealt with in accordance with the provisions of the Law and the Implementing Regulations.
These provisions build on Article 9, which requires a separate account for each project that is activated only after licensing and annotation of the title deed. The aim is that the money paid by buyers, lessees and financiers remains earmarked for completing the project itself.
Article 11 follows to show the mechanism of spending from the account, which is a disbursement document signed by the developer, the consulting office and the certified accountant.
If there is a dispute over the escrow account's funds, it is advisable to consult a lawyer who specializes in real estate or banking cases.
Practical example
A development company in Jeddah accumulated debts to a building materials supplier on another project, and the supplier wanted to attach the funds of the escrow account for the apartment project the company is selling off-plan. Under paragraph (1), the amounts deposited in the escrow account may not be attached for the benefit of the developer's creditors, because they are dedicated to spending on the licensed project only.
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 10 of the Saudi Off-Plan Real Estate Sales and Leasing Law
Can the developer's creditors attach the escrow account?
No. The article provides that the amounts deposited in the escrow account may not be attached for the benefit of the developer's creditors.
May the developer use escrow account funds on another project?
No. The account is dedicated to spending on the licensed real estate project only.
Where is project financing deposited?
If the developer or the landowner obtains financing for the licensed project, it must be deposited in the escrow account, and dealt with in accordance with the Law and the Implementing Regulations.
More articles on Project Escrow Account
- Article 9
The article requires a separate escrow account in the name of each real estate project, activated only after the project is licensed and the property's title deed is annotated.
ينشأ حساب ضمان مستقل باسم كل مشروع عقاري، ولا يُفعَّل إلا بعد الحصول على الترخيص الخاص للمشروع العقاري والتأشير على صك تسجيل الملكية للعقار المراد تطويره.
- Article 11
The article requires a disbursement document signed by the developer, the consulting office and the certified accountant for spending from the escrow account, and allows emergency disbursement at the competent authority's request.
يكون الصرف من حساب الضمان بناءً على وثيقة صرف يوقعها المطور والمكتب الاستشاري والمحاسب القانوني، وفي الحالات الطارئة يجوز الصرف بطلب من الجهة المختصة، وفقًا لما
- Article 12
The article allows the developer to spend from the escrow account on administrative, marketing and other non-construction expenses up to 20% of the value of the real estate unit sold.
يجوز للمطور طلب الصرف من حساب الضمان للمصاريف الإدارية والتسويقية -والمصاريف الأخرى غير الإنشائية للمشروع العقاري المرخص له- بنسبة لا تتجاوز (20%) من قيمة الوحد
- Article 13
The article lets the developer, with the competent authority's approval, withdraw what exceeds the actual cost of finishing the project based on the contractor's and consulting office's report, with 20% left in the account.
يجوز للمطور -بعد موافقة الجهة المختصة- سحب ما يفيض عن التكلفة الفعلية الإجمالية لإنهاء المشروع العقاري وخدماته، بناءً على تقرير من المقاول والمكتب الاستشاري. عل
- Article 14
The article requires keeping 5% of the construction cost in the escrow account, or a bank guarantee of the same percentage, after the completion certificate; it is released only after a year or with latent-defects insurance.
يجب على المحاسب القانوني الاحتفاظ بنسبة (5%) من القيمة الإجمالية لتكلفة الإنشاءات في حساب الضمان، أو أن يقدم المطور للمحاسب القانوني ضمانًا بنكيًّا بالنسبة نفسه
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.