Article 16 of the Saudi Off-Plan Real Estate Sales and Leasing Law
المادة 16 من نظام بيع وتأجير مشروعات عقارية على الخارطة
The article bars the developer and the landowner from disposing of the common part of the licensed project before the units are separated; after separation, disposal follows the law on ownership of real estate units.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يحق للمطور ولا مالك الأرض التصرف في الجزء المشاع من المشروع العقاري المرخص له قبل فرز الوحدات العقارية. ويكون التصرف فيه بعد الفرز وفقًا لنظام ملكية الوحدات العقارية وفرزها إدارتها.
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 16 explained in plain English
This article protects the common areas of the real estate project. Under Article 1, the common part is the part shared among the owners of the real estate units in the project, unlike the real estate unit, which is the separate part the developer sells or leases to others.
The rule before separation: Neither the developer nor the landowner may dispose of the common part of the licensed real estate project before the real estate units are separated. The prohibition covers both parties, so the landowner cannot dispose of these parts alone on the pretext that it owns the land.
The rule after separation: Disposal of the common part is in accordance with the Law on Ownership, Separation and Management of Real Estate Units; that is, this article does not itself govern disposal after separation but refers it to that law.
The importance of the article to an off-plan buyer is that it prevents the developer or the landowner from disposing of the shared parts before the units are separated, which preserves the owners' shared rights in them.
It is followed by Article 17, which gives the buyer and the lessee the right to see their own accounting records. If disposal of a common part appears to have occurred before separation, the buyer can consult a lawyer who specializes in real estate cases.
Practical example
Noura bought an apartment off-plan in a residential project in Jeddah that includes a shared swimming pool, walkways and public parking for residents. Before the units were separated, the developer wanted to dispose of part of these shared facilities to another party. This article bars the developer and the landowner from disposing of the common part before separation.
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 16 of the Saudi Off-Plan Real Estate Sales and Leasing Law
May the developer sell the common areas of the project?
Neither the developer nor the landowner may dispose of the common part of the licensed project before the real estate units are separated.
What is the rule after the units are separated?
Disposal of the common part after separation is in accordance with the Law on Ownership, Separation and Management of Real Estate Units.
What is meant by the common part?
It is the part shared among the owners of the real estate units in the real estate project.
More articles on Rights of the Off-Plan Buyer
- 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
- Article 17
The article gives the buyer or lessee, or their representative, the right to see the accounting records concerning them and be given copies, as the Implementing Regulations specify.
يحق للمشتري، أو المستأجر، أو من ينوب عنهما؛ الاطلاع على السجلات المحاسبية الخاصة به، وتزويده بنسخ منها، وفقًا لما تحدده اللائحة.
- Article 20
The article requires the developer to finish the project on time and compensates the buyer for late delivery, and lets the competent authority deal with a stalled project and suspend it on violation.
1- يلتزم المطور بإنهاء المشروع العقاري في الموعد المحدد لإنجازه. وفي حال التأخر عن تسليم الأرض أو الوحدة العقارية دون سبب خارج عن إرادته؛ فيستحق المشتري تعويضاً
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.