Article 6 of the Saudi Real Estate Finance Law

Every long-term finance carries risks, such as default or damage to the property. This article addresses how to hedge these risks:

• Who may: Real estate financiers, who under Article 1 are licensed commercial banks and finance companies, as well as real estate refinancing companies.
• What they may do: Cover real estate finance risks.
• The means: Cooperative insurance.
• The controls: In accordance with the Implementing Regulations.

The text begins with the phrase "financiers may", which is a form of permission, not obligation; the article makes this option available to financiers and does not make it a duty on them by its text. The article does not specify the types of risks covered, or who bears the cost of the insurance, but leaves the details to the Implementing Regulations. So from the text alone one cannot say whether the beneficiary bears the insurance premium; the reference for that is the finance contract itself and the Implementing Regulations.

This article comes after Article 5, which requires courts and notary offices to allow licensed financiers to view the information in real estate registers, and is followed by Article 7, which requires the beneficiary to have a credit record with a licensed service provider. Together these articles give the financier tools to assess and manage risk.

If your finance contract contains insurance terms you want to understand, you can consult a lawyer specializing in banking and real estate finance.