Article 17 of the Saudi Registered Real Estate Mortgage Law
المادة 17 من نظام الرهن العقاري المسجل
The article lets the mortgagee transfer its right to collect the debt, together with the mortgage that secures it, to another person, subject to the rules on dealing in debts, unless otherwise agreed.
Official text (Arabic)
This article has not been amended since the law was issued.
مع مراعاة أحكام التصرف في الديون، يجوز للمرتهن نقل حقه في استيفاء الدين مع الرهن الضامن له لغيره، ما لم يتفق على خلاف ذلك.
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 17 explained in plain English
This article shows that the mortgagee's right is not locked in its hands: it may transfer its right to collect the debt, together with the mortgage securing it, to another person. The debt and the mortgage pass together to the new person.
The article subjects this permission to two qualifications:
- Subject to the rules on dealing in debts: the transfer must comply with the rules governing dealings in debts, which the article does not spell out.
- Unless otherwise agreed: the mortgage contract may include an agreement that prohibits or restricts the transfer.
Note that the article speaks of transferring the right together with the mortgage, since the mortgage follows the debt it secures. The new creditor thus takes the place of the original mortgagee in respect of the secured right.
Article 18 then explains what happens when the debt falls due: either the debtor pays and takes back the property, or the property is sold at the mortgagee's request. Anyone who receives notice that their mortgage debt has been transferred to another party, or who wants to stipulate that this not be allowed, should consider consulting a lawyer specializing in real estate and real estate finance cases.
Practical example
Omar mortgaged his house in Riyadh to a financing provider, and the provider then transferred its right in the debt to another financing provider. The mortgage passes with the debt to the new provider, unless the mortgage contract prohibits this, and subject to the rules on dealing in debts.
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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Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Dr. Saleh Altayyar & Partners Law Firm
Frequently asked questions about Article 17 of the Saudi Registered Real Estate Mortgage Law
Can a financier transfer a mortgage-secured loan to another party?
Yes. The mortgagee may transfer its right to collect the debt, together with the mortgage that secures it, to another person, subject to the rules on dealing in debts, unless otherwise agreed.
Can the mortgage contract prevent the debt from being transferred?
Yes. The article applies unless otherwise agreed.
More articles on Debt Secured by the Mortgage
- Article 9
The article sets out what a mortgage can secure: an established debt, a specified promised debt, a specific item guaranteed by the debtor, or a debt that will become due. The contract must state the amount of the debt or its maximum limit.
يشترط في مقابل الرهن أن يكون دينًا، ثابتًا في الذمة، أو موعودًا به محددًا، أو عينًا من الأعيان المضمونة على المدين، أو دينًا مآله إلى الوجوب، كدين معلق على شرط
- Article 10
The article sets the principle that a mortgage is indivisible: every part of the property secures the whole debt, and every part of the debt is secured by the whole property, unless otherwise agreed.
كل جزء من العقار المرهون ضامن لكل الدين، وكل جزء من الدين مضمون بالعقار المرهون، ما لم يتفق على غير ذلك.
- Article 22
The article confines the effect of the mortgage to the debt specified in the mortgage document, so it does not extend to other debts not mentioned in it.
يقتصر أثر الرهن على الدين المحدّد في وثيقة 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.