Article 12 of the Saudi Off-Plan Real Estate Sales and Leasing Law
المادة 12 من نظام بيع وتأجير مشروعات عقارية على الخارطة
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.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز للمطور طلب الصرف من حساب الضمان للمصاريف الإدارية والتسويقية -والمصاريف الأخرى غير الإنشائية للمشروع العقاري المرخص له- بنسبة لا تتجاوز (20%) من قيمة الوحدة العقارية المبيعة. وعلى المحاسب القانوني التأكد من ألا يتجاوز مجموع ما يصرف من حساب الضمان للمصاريف غير الإنشائية ما نسبته (20%) من إجمالي قيمة الوحدات العقارية المبيعة.
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 12 explained in plain English
This article sets a ceiling on the non-construction expenses that may be spent from the escrow account, so that most of the buyers' money stays directed to the construction itself.
What may the developer request?
- Spending from the escrow account on administrative and marketing expenses, and other non-construction expenses of the licensed real estate project.
- In a percentage not exceeding 20% of the value of the real estate unit sold.
The role of the certified accountant: The accountant must make sure that the total spent from the escrow account on non-construction expenses does not exceed 20% of the total value of the real estate units sold.
The article thus applies the limit at two levels: on each unit sold, and on the overall total of units sold. In both cases, what counts is the units that have been sold, not the total units of the project.
This article works with Article 11, which requires for any spending a document signed by the developer, the consulting office and the certified accountant. What exceeds the actual cost of completing the project is governed by Article 13.
If a buyer suspects that this percentage has been exceeded, they can consult a lawyer who specializes in real estate cases.
Practical example
A development company in Riyadh sold an off-plan apartment for SAR 800,000. The company may request spending from the escrow account on administrative and marketing expenses not exceeding 20% of the value of this apartment, that is SAR 160,000, and the certified accountant makes sure that the total of these expenses does not exceed 20% of the total value of all the units sold.
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 12 of the Saudi Off-Plan Real Estate Sales and Leasing Law
How much may the developer spend on marketing from the escrow account?
The developer may request spending on administrative, marketing and non-construction expenses in a percentage not exceeding 20% of the value of the real estate unit sold.
Who monitors the percentage of non-construction expenses?
The certified accountant, who must make sure the total does not exceed 20% of the total value of the real estate units sold.
Is the percentage calculated on all the project's units?
The text ties the percentage to the value of the real estate units sold.
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 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 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.