Article 9 of the Saudi Off-Plan Real Estate Sales and Leasing Law
المادة 9 من نظام بيع وتأجير مشروعات عقارية على الخارطة
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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.
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 9 explained in plain English
This article sets two basic rules on the escrow account, which under Article 1 is a bank account specific to the real estate project into which the amounts paid by financiers, buyers or lessees are deposited:
- Independence: A separate escrow account is established in the name of each real estate project. The funds of one project are therefore not mixed with the funds of another project of the same developer.
- Condition for activation: The account is activated only after both of the following:
- Obtaining the special license of the real estate project.
- The annotation on the title deed of the property to be developed, which is the no-disposal annotation provided for in Article 8.
In practice, this means that the account does not begin operating before the project's legal steps are complete, which ties the collection of funds to a licensed project and a property protected from disposal.
Article 10 follows to show the purpose of the account, which is spending on the licensed project only, with a prohibition on attachment of its funds for the benefit of the developer's creditors.
It benefits a buyer to make sure that the amounts they pay are deposited in the escrow account of the project in which they bought.
Practical example
A development company in Riyadh has two off-plan projects in different neighborhoods. Under this article, each project must have a separate escrow account in its name, so what the buyers of the first project pay is not mixed with the funds of the second project, and no account is activated until its project is licensed and its land's title deed is annotated.
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 9 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 9 of the Saudi Off-Plan Real Estate Sales and Leasing Law
Can a developer have one escrow account for several projects?
No. The article provides for establishing a separate escrow account in the name of each real estate project.
When does the escrow account begin operating?
It is activated only after obtaining the special license of the real estate project and the annotation on the title deed of the property to be developed.
More articles on Project Escrow Account
- 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 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.