Article 11 of the Saudi Off-Plan Real Estate Sales and Leasing Law
المادة 11 من نظام بيع وتأجير مشروعات عقارية على الخارطة
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 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 11 explained in plain English
This article governs the method of spending from the escrow account, so that the developer alone does not control the funds of buyers and financiers.
The general rule: Spending is based on a disbursement document signed by three parties:
- The developer, the owner of the project.
- The consulting office, which under Article 1 is a licensed consulting engineering office approved by the competent authority for the project.
- The certified accountant, a licensed person approved by the competent authority for the project.
Requiring the signature of the consulting office and the certified accountant alongside the developer provides technical and financial oversight of every disbursement.
The exception: In emergency cases, spending may be made at the request of the competent authority. The article does not define what counts as an emergency or the procedures for such disbursement, but refers this to what the Implementing Regulations specify.
This article is linked to Article 10, which dedicates the account to spending on the licensed project only, and to Article 12, which sets a ceiling on what may be spent from the account on non-construction expenses such as administrative and marketing costs.
Practical example
A development company in Madinah wanted to pay an installment to the reinforced concrete structure contractor from the escrow account. The disbursement is not made at the company's request alone, but by a disbursement document signed by the developer and by the consulting office and certified accountant approved for the project.
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 contentA question about Article 11 of Off-Plan Real Estate Sales and Leasing Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Banking, 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
Active contributor
Akbar Law Firm & Legal Consultancy
Frequently asked questions about Article 11 of the Saudi Off-Plan Real Estate Sales and Leasing Law
Can the developer withdraw from the escrow account alone?
No. Spending is based on a disbursement document signed by the developer, the consulting office and the certified accountant.
Can spending be made from the escrow account without the signatures of the three parties?
In emergency cases, spending may be made at the request of the competent authority, as the Implementing Regulations specify.
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 10
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.
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
- 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.