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Article 24 of the Saudi Off-Plan Real Estate Sales and Leasing Law

المادة 24 من نظام بيع وتأجير مشروعات عقارية على الخارطة

The article punishes with up to 5 years' imprisonment or a fine of up to SAR 10 million, or both, selling without a license, phantom projects, embezzling funds, failing to deposit them in escrow and similar acts.

Official text (Arabic)

This article has not been amended since the law was issued.

دون إخلال بأي عقوبة أشد ينص عليها نظام آخر، يعاقب بالسجن لمدة لا تزيد على (خمس) سنوات أو بغرامة لا تزيد على (عشرة ملايين) ريال، أو بهما معًا:

1- كل من زاول نشاط بيع وتأجير مشروعات عقارية على الخارطة، أو جمع مبالغ من مشترين أو مستأجرين لعقارات في مشروع عقاري، دون الحصول على ترخيص.

2- كل من قدم مستندات أو بيانات غير صحيحة لطلب الحصول على الترخيص للمشروع العقاري.

3- كل من عرض أو أعلن عن بيع أو تأجير عقارات على الخارطة في مشروعات عقارية وهمية مع علمه بذلك.

4- كل من اختلس أو بدد أو استعمل دون وجه حق مبالغ سُلِّمت له لغرض إقامة المشروع العقاري.

5- كل من تسلم مبالغ لغرض حجز أراضٍ أو وحدات عقارية بنيَّة بيعها أو تأجيرها على الخارطة بحسب الأحوال، ولم يودعها في حساب الضمان.

6- كل محاسب قانوني تعمد وضع تقرير غير صحيح نتيجة مراجعته للمركز المالي للمشروع العقاري، أو أخفى عمدًا وقائع جوهرية في تقريره.

7- كل من صادق من الاستشاريين على مستندات غير صحيحة تخص المشروع العقاري مع علمه بذلك.

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 24 explained in plain English

This article sets the most severe penalties in the Law: imprisonment for a period not exceeding 5 years, or a fine not exceeding SAR 10 million, or both, without prejudice to any more severe penalty provided for in another law.

The punishable acts:

  1. Engaging in the activity of off-plan sale and leasing of real estate projects, or collecting amounts from buyers or lessees of real estate in a real estate project, without obtaining a license.
  2. Submitting incorrect documents or data to apply for the project license.
  3. Offering or advertising the sale or lease of real estate off-plan in phantom projects with knowledge of that.
  4. Embezzling or squandering amounts delivered for the purpose of carrying out the project, or using them without right.
  5. Receiving amounts to reserve land or real estate units with the intention of selling or leasing them off-plan, without depositing them in the escrow account.
  6. A certified accountant who deliberately prepared an incorrect report as a result of reviewing the project's financial position, or deliberately concealed material facts in his report.
  7. A consultant who certified incorrect documents concerning the project knowing of that.

Note that for some of these acts the text requires knowledge or deliberateness (paragraphs 3, 6 and 7), so a mere mistake is not enough. The text also covers "whoever" commits the act, and is not limited to registered developers.

Article 23 provides for excluding these violations from the table classifying violations issued by the official. Article 25 also lets the competent authority strike off the developer's registration in cases including its being punished for a serious violation.

Anyone facing an accusation of one of these acts, or harmed by them as a buyer, is advised to consult a lawyer who specializes in criminal and real estate cases.

Practical example

A person in Riyadh collected amounts from several people to reserve apartments in an off-plan project without obtaining a license for the project, and did not deposit the amounts in any escrow account. This act falls under paragraphs (1) and (5) of the article, and exposes him to imprisonment for a period not exceeding 5 years or a fine not exceeding SAR 10 million or both.

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 24 of the Saudi Off-Plan Real Estate Sales and Leasing Law

What is the penalty for selling off-plan without a license?

Imprisonment for a period not exceeding 5 years, or a fine not exceeding SAR 10 million, or both, without prejudice to any more severe penalty in another law.

Is failing to deposit reservation amounts in the escrow account an offense?

Yes. Paragraph (5) punishes whoever receives amounts to reserve land or units with the intention of selling or leasing them off-plan and does not deposit them in the escrow account.

Is a certified accountant punished for incorrect reports?

Yes, if he deliberately prepared an incorrect report on the project's financial position or deliberately concealed material facts in his report.

What is the penalty for advertising a phantom off-plan project?

The same penalty covers whoever offers or advertises the sale or lease of real estate in phantom projects knowing of that.

More articles on Penalty for Off-Plan Sales without a License

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.