Article 12 of the Saudi Registered Real Estate Mortgage Law
المادة 12 من نظام الرهن العقاري المسجل
The article gives the yield, upkeep and management of the mortgaged property to its owner without prejudice to the mortgagee. The yield is not mortgaged unless the mortgagee requires it, and the parties may agree to settle due debt from it.
Official text (Arabic)
This article has not been amended since the law was issued.
1 - غلّة العقار المرهون لمالكه ونفقته عليه، وإدارته حق له بما لا يخل بحق المرتهن.
2 - لا تكون الغلة رهنًا مع الأصل إلا إن اشترط المرتهن ذلك.
3 - يجوز أن يتفق الراهن والمرتهن على استيفاء ما حل من الدين خصمًا من غلة العقار المرهون.
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 12 explained in plain English
This article answers the question of the income of the mortgaged property and its expenses, such as the rent of a building or the crop of a farm. It sets three rules:
- The yield, upkeep and management belong to the owner: the yield of the mortgaged property belongs to its owner, its upkeep is the owner's responsibility, and its management is the owner's right, provided this does not prejudice the mortgagee's right. A mortgage does not take away the owner's right to the property's income or to manage it.
- The yield is not automatically mortgaged: the yield is not mortgaged along with the principal property unless the mortgagee stipulates it.
- Settling the debt from the yield by agreement: the mortgagor and the mortgagee may agree that the part of the debt that has fallen due is settled by deduction from the yield of the mortgaged property.
Note that the third rule concerns the part of the debt that has fallen due, meaning what has become payable. The owner's right of management is also limited by the requirement not to prejudice the mortgagee's right, which ties in with the mortgagor's duty to preserve the soundness of the property under Article 13.
This article also relates to Article 11, which governs the mortgagor's dealing with the mortgaged property. Anyone who wants an arrangement under which the property's rent is applied to the installments should write it clearly in the contract and may consult a lawyer specializing in real estate and real estate finance cases.
Practical example
Sultan mortgaged a residential building in Riyadh to a financing provider, and it is rented to several tenants. The rents remain Sultan's and the upkeep of the building is his responsibility. The rents are not part of the mortgage unless the financing provider stipulates it. They may also agree to deduct the installments that have fallen due from these rents.
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 12 of the Saudi Registered Real Estate Mortgage Law
Who is entitled to the rent of a mortgaged property?
The yield of the mortgaged property belongs to its owner, and it is not mortgaged along with the principal property unless the mortgagee stipulates it.
Who bears the expenses of a mortgaged property?
The upkeep of the mortgaged property is the owner's responsibility, and its management is the owner's right, provided this does not prejudice the mortgagee's right.
Can the debt be repaid from the income of the mortgaged property?
Yes. The mortgagor and the mortgagee may agree to settle the part of the debt that has fallen due by deduction from the yield of the mortgaged property.
More articles on Rights and Duties of Mortgagor and Mortgagee
- Article 11
The article allows dealing with a mortgaged property that is registered under the Real Estate Registration Law, and prevents the mortgagor from dealing with an unregistered one unless an agreement is documented in its deed and record.
1 - إذا كان العقار مسجلاً وفقًا لأحكام نظام التسجيل العيني للعقار، جاز التصرف فيه. 2 - إذا لم يكن العقار مسجلاً وفقًا لأحكام نظام التسجيل العيني للعقار، فلا يجو
- Article 13
The article obliges the mortgagor to preserve the mortgaged property until the debt is paid, and lets the mortgagee object to anything that reduces its value, take lawful precautionary measures, and recover the costs from the mortgagor.
يلتزم الراهن بالمحافظة على سلامة العقار المرهون حتى تاريخ وفاء الدين، وللمرتهن الاعتراض على جميع ما من شأنه إنقاص قيمة العقار المرهون، أو تعريضه للهلاك، أو العي
- Article 16
The article lets the mortgagee ask the court to stop works that expose the mortgaged property to destruction or defect or make it insufficient as security, under the rules of urgent judicial proceedings.
إذا وقعت أعمال من شأنها أن تعرض العقار المرهون للهلاك أو العيب، أو تجعله غير كاف للضمان، فللمرتهن أن يطلب من المحكمة وقف هذه الأعمال، واتخاذ الوسائل التي تمنع و
- Article 19
The article invalidates two conditions in a mortgage contract: that the mortgaged property's benefits go to the mortgagee, and that the mortgagee acquires the property if the debt is not paid on time. The mortgage stays valid.
لا يصح أن يشترط في عقد الرهن ما يأتي: 1 - أن تكون منافع العقار المرهون للمرتهن، وللمرتهن بموافقة الراهن تحصيل غلة العقار المرهون على ألا ينتفع بها. 2 - أن يمتلك
- Article 20
The article states when a lease granted by the mortgagor of a property registered under the Real Estate Registration Law binds the mortgagee, and requires the mortgagor of an unregistered property to disclose rights in rem in the contract.
1 - إذا كان العقار المرهون مسجلاً وفقًا لنظام التسجيل العيني للعقار، فلا ينفذ عقد الإيجار الصادر من الراهن في حق المرتهن إلا إذا كان مسجلاً قبل تسجيل عقد الرهن،
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.