Article 25 of the Saudi Off-Plan Real Estate Sales and Leasing Law
المادة 25 من نظام بيع وتأجير مشروعات عقارية على الخارطة
The article sets the cases for striking a developer off the developers registry: discretionary for not starting within 6 months, repeated stalling or poor quality, and mandatory on bankruptcy or punishment for a serious violation.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للجهة المختصة أن تشطب قيد المطور من سجل قيد المطورين في أي من الحالتين الآتيتين:
أ- إذا لم يباشر الأعمال الإنشائية للمشروع العقاري المرخص له بعد انقضاء (ستة) أشهر من تاريخ حصوله على الترخيص، دون عذر مقبول.
ب- إذا تكرر منه تأخير أو تعثر في الإنجاز لعدد من المشروعات العقارية، أو ثبت إخلاله بجودة تنفيذها بصورة ينتج عنها ضرر للمشترين أو المستأجرين.
2- تشطب الجهة المختصة قيد المطور من سجل قيد المطورين في أي من الحالتين الآتيتين:
أ- إذا أشهر إفلاسه.
ب- إذا عوقب لارتكابه أي مخالفة جسيمة لأحكام النظام أو أحكام الأنظمة واللوائح المنظمة لمزاولة نشاط التطوير العقاري في المملكة خلال تنفيذه للمشروع العقاري، على أن تحدد اللائحة المخالفات الجسيمة.
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 25 explained in plain English
This article governs striking the developer's registration off the developers registry, and distinguishes between cases in which striking off is discretionary and others in which it is mandatory.
(1) Discretionary striking off (the competent authority may strike off):
- If it has not begun the construction work of the licensed project after 6 months from the date it obtained the license, without an acceptable excuse.
- If it has repeatedly delayed or stalled in completing a number of real estate projects, or it is established that it has failed in the quality of their execution in a way that results in harm to buyers or lessees.
(2) Mandatory striking off (the competent authority strikes off):
- If it has been declared bankrupt.
- If it has been punished for committing any serious violation of the provisions of the Law, or of the laws and regulations governing the practice of real estate development activity in the Kingdom, during its execution of the real estate project. The Implementing Regulations specify the serious violations.
Note that the quality case is restricted to cases that result in harm to buyers or lessees, and that the case of not starting is restricted to there being no acceptable excuse.
The importance of striking off is that registration in the developers registry is a condition for engaging in off-plan sale and leasing activity. The article comes after Article 24, which sets the criminal penalties, and before Article 26, which assigns investigation and prosecution of the Article 24 violations to the Public Prosecution.
A developer exposed to being struck off would do well to consult a lawyer who specializes in real estate or administrative cases.
Practical example
A development company in Riyadh obtained a license for an off-plan project, but did not begin any construction work after 6 months had passed, and did not provide an acceptable excuse. In this case the competent authority may strike the company off the developers registry under paragraph (1/a).
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 25 of the Saudi Off-Plan Real Estate Sales and Leasing Law
When is a developer struck off the developers registry by obligation?
If it is declared bankrupt, or is punished for committing a serious violation of the provisions of the Law or the laws and regulations governing real estate development activity during its execution of the project.
Is a developer struck off if it does not start building within 6 months?
The competent authority may strike it off if it has not begun the construction work after 6 months from obtaining the license without an acceptable excuse.
Is repeated stalling a reason for striking off?
Yes. The competent authority may strike off if the developer repeatedly delays or stalls in completing a number of projects, or it is established that it failed in the quality of their execution in a way that harms buyers or lessees.
More articles on Register of Real Estate Developers
- Article 3
The article bars a developer from off-plan sale and leasing unless registered in the developers registry, and bars advertising or exhibiting a project before it is licensed.
لا يحق لأي مطور عقاري مزاولة نشاط بيع وتأجير مشروعات عقارية على الخارطة إلا إذا كان مقيدًا في سجل قيد المطورين، ولا يحق الإعلان عنها في وسائل الإعلام المحلية أو
- Article 4
The article sets the competent authority's tasks: supervising real estate projects, licensing and monitoring them, preparing a public database of licensed projects, and preparing the developers registry.
تتولى الجهة المختصة وفقًا للنظام ما يلي: 1- الإشراف على المشروعات العقارية، بما في ذلك إصدار التراخيص اللازمة لها، ومتابعة تنفيذها، والرقابة والتفتيش عليها. ويج
- Article 5
The article allows the competent authority to ask a developer who markets the project through a real estate broker for a copy of the agreement concluded with the broker, as the Implementing Regulations specify.
للجهة المختصة أن تطلب من المطور -إذا رغب في تسويق المشروع العقاري من خلال وسيط عقاري- تزويدها بنسخة من الاتفاقية المبرمة مع الوسيط العقاري، وذلك وفقًا لما تحدده
- Article 7
The article allows the competent authority, when needed, to register a natural person in the developers registry and license them for off-plan sale and leasing under rules set by the Implementing Regulations.
للجهة المختصة -في سبيل تحقيق أهداف النظام وعند الاقتضاء- قيد الشخص الطبيعي في سجل قيد المطورين والترخيص له بمزاولة نشاط بيع وتأجير مشروعات عقارية على الخارطة؛ و
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.