Article 5 of the Saudi Real Estate Investment Schemes Law
المادة 5 من نظام المساهمات العقارية · الفصل الثاني: الترخيص والاشتراكات
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.
Official text (Arabic)
This article has not been amended since the law was issued.
يجب أن يكون المرخص له مؤهلاً ومصنفاً من الهيئة لممارسة نشاط المساهمات العقارية 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 5 explained in plain English
It is not enough for a person to want to offer a real estate investment scheme or to own suitable land. This article requires the licensee, who under Article 1 is the person who holds the scheme license, to be:
- Qualified by the General Authority for Real Estate.
- Classified by it to carry on real estate investment scheme activity.
The conditions and details of qualification and classification are referred by the article to the regulations, so this article does not state specific criteria, and conditions that do not appear in it should not be assumed.
The benefit of this requirement to participants is that it ensures the body running the scheme is one whose competence the Authority has already verified, which complements the property conditions and the Capital Market Authority's approval provided for in Article 4. Anyone who wants to join a scheme should check that the licensee is qualified and classified with the Authority. Anyone who wants to enter this activity as a developer or practitioner must review the regulations' requirements, and may consult a lawyer specialized in real estate matters.
Practical example
A start-up company in Dammam owns land and wants to offer it as a real estate investment scheme. Its adviser explained that it must first be qualified and classified by the General Authority for Real Estate to carry on the activity under the regulations, before it can become a licensee of a scheme.
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 contentReal Estate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Real Estate Law lawyers
Lawyers who handle this kind of case
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Mohammed bin Saleh Al-Qarawi Law and Notary Office, Riyadh
Frequently asked questions about Article 5 of the Saudi Real Estate Investment Schemes Law
Who may be a licensee of a real estate investment scheme?
The licensee must be qualified and classified by the General Authority for Real Estate to carry on real estate investment scheme activity as the regulations specify.
Where do I find the conditions for qualification and classification?
The article refers the setting of these conditions to the Law's Implementing Regulations.
Is owning the land enough to offer a scheme?
No, in addition to the property conditions the licensee must be qualified and classified by the Authority.
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 4
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.
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 النظا
- 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.