Article 4 of the Saudi Real Estate Investment Schemes Law
المادة 4 من نظام المساهمات العقارية · الفصل الأول: تعريفات وأحكام عامة
The article prohibits offering, advertising, marketing or raising funds for a real estate investment scheme until the Capital Market Authority approves and the Authority issues a license, after verifying the property's title deed and development approvals.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يجوز طرح المساهمة العقارية ولا الإعلان عنها ولا تسويقها ولا جمع الأموال لها إلا بعد موافقة هيئة السوق المالية والحصول على ترخيص من الهيئة -وفقاً لأحكام النظام واللائحة- وذلك بعد التحقق مما يأتي:
1- أن يكون العقار محل المساهمة العقارية مملوكاً بموجب صك ملكية ساري المفعول، ثابتة سلامته، بناءً على إفادة من الجهة التي أصدرته.
2- أن يكون العقار محل المساهمة العقارية حاصلاً على الموافقات اللازمة لتطويره من الجهات المختصة وذلك وفقاً لما تحدده اللائحة.
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 4 explained in plain English
This article is the basic gateway for any real estate investment scheme. It prohibits four acts until specified requirements are met:
- Offering the scheme.
- Advertising it.
- Marketing it.
- Raising funds for it.
None of this is allowed until two things have both happened: the approval of the Capital Market Authority, and obtaining a license from the General Authority for Real Estate under the Law and the regulations. Before the license, two conditions are verified in the property that is the subject of the scheme:
- That it is owned under a valid title deed whose soundness is confirmed, based on a statement from the body that issued it.
- That it has the approvals needed for its development from the competent bodies, as the regulations specify.
The importance of the article to the ordinary participant is clear: advertising a scheme, marketing it or raising funds for it before these approvals are met is prohibited by the text of the article, so anyone offered a chance to join should first check that the license and the Capital Market Authority's approval exist. This is linked to Article 3, which gives the Authority the power to issue the license, and Article 5, which requires the licensee to be qualified and classified. If you doubt a scheme that has been offered, you may consult a lawyer specialized in real estate matters.
Practical example
Khalid saw an advertisement on social media inviting people to join the development of land in Riyadh in return for expected profits. Before transferring any amount he asked about the General Authority for Real Estate's license and the Capital Market Authority's approval, because Article 4 does not allow advertising the scheme or raising funds for it until both exist.
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 4 of the Saudi Real Estate Investment Schemes Law
May a real estate investment scheme be advertised before it is licensed?
No, the article prohibits offering the scheme, advertising it, marketing it or raising funds for it until the Capital Market Authority approves and a license is obtained from the Authority.
What are the conditions for the property that is the subject of the scheme?
It must be owned under a valid title deed whose soundness is confirmed by a statement from the issuing body, and have the approvals needed for its development from the competent bodies as the regulations specify.
Is the General Authority for Real Estate's approval alone enough?
No, the article requires the Capital Market Authority's approval in addition to the General Authority for Real Estate's license.
More articles on Licensing a Real Estate Scheme
- Article 3
The article makes the General Authority for Real Estate the regulator of real estate investment schemes and lists its powers, from licensing, classification and qualification conditions to fee-basis setting and oversight.
دون إخلال باختصاصات الجهات الحكومية الأخرى، تتولى الهيئة تنظيم نشاط المساهمات العقارية وفقاً لما يحدده النظام واللائحة، ولها على وجه خاص ما يأتي: 1- إصدار الترخ
- Article 5
The article requires the licensee to be qualified and classified by the Authority to carry on real estate investment scheme activity, as the regulations specify.
يجب أن يكون المرخص له مؤهلاً ومصنفاً من الهيئة لممارسة نشاط المساهمات العقارية وفقاً لما تحدده اللائحة.
- Article 17
The article provides that a real estate investment scheme acquires legal personality when the Authority issues the license, and that it is then subject to the Law and the Implementing Regulations.
تكتسب المساهمة العقارية الشخصية الاعتبارية بصدور الترخيص من قبل الهيئة، وتكون خاضعة لأحكام النظام واللائحة.
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.