Article 18 of the Saudi Registered Real Estate Mortgage Law
المادة 18 من نظام الرهن العقاري المسجل
The article requires the debt to be paid when it falls due. If the debtor pays, the debtor takes back the property; if not, it is sold at the mortgagee's request and the mortgagee takes priority by rank, then shares in the debtor's other assets for any balance.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا حل أجل الدين وجب أداؤه، فإذا أداه المدين أخذ عقاره المرهون، وإن لم يؤدّه بيع العقار المرهون بطلب المرتهن، ويقدّم على جميع الغرماء في استيفاء دينه من ثمنه وفقًا لمرتبته شرعًا ونظامًا، فإذا بقي للمرتهن دينٌ حاصص الغرماء في باقي أموال المدين كغيره من الدائنين.
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 18 explained in plain English
This article explains what happens when the debt secured by the mortgage falls due. The rule is that once the term arrives, payment is required, and the outcome then depends on what the debtor does:
- If the debtor pays the debt: the debtor takes back the mortgaged property.
- If the debtor does not pay: the mortgaged property is sold at the mortgagee's request, and the mortgagee takes priority over all the creditors in recovering its debt from the price of the property, according to its rank under Sharia and law.
The article then addresses the case where the price is insufficient: if a debt remains owing to the mortgagee after it has recovered what it can from the price, it shares with the creditors in the debtor's remaining assets like any other creditor. That is, its priority is confined to the price of the mortgaged property, and beyond that it stands in the same line as the other creditors, who divide the debtor's assets in proportion to their debts.
This article does not set out the procedures for the sale; it establishes the right to request it and the priority in the price. It is connected to Article 17, which lets the mortgagee transfer its right in the debt with the mortgage to another, and to Article 19, which invalidates a condition that the mortgagee acquires the property if the mortgagor does not pay on time, so the route is sale, not acquisition.
Anyone who is in default on a debt secured by a real estate mortgage, or who is a creditor of a debtor whose property is mortgaged, should consult a lawyer specializing in enforcement and real estate finance cases.
Practical example
A loan secured by a mortgage on Turki's land in Riyadh fell due and he did not pay it, so the mortgagee asked for the land to be sold. The mortgagee recovered its debt from the price ahead of Turki's other creditors according to its rank. As the price did not cover the whole debt, it shared the balance with the other creditors in Turki's other assets on a pro rata basis.
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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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 18 of the Saudi Registered Real Estate Mortgage Law
What happens if I do not repay a mortgage-secured debt when it falls due?
The mortgaged property is sold at the mortgagee's request, and the mortgagee takes priority over all creditors in recovering its debt from the price according to its rank under Sharia and law.
What happens if the price of the property does not cover the debt?
If a debt remains owing to the mortgagee, it shares with the creditors in the debtor's remaining assets like any other creditor.
When do I get my mortgaged property back?
If you pay the debt when it falls due, you take back your mortgaged property.
More articles on Enforcing Against the Mortgaged Property
- Article 15
The article limits enforcement against a real surety, who is not the debtor, to the mortgaged property alone, and lets the owner claim against the debtor after the property is sold but not before enforcement against it.
1 - إذا كان الراهن كفيلاً عينيًّا، فلا يجوز التنفيذ على ما سوى العقار المرهون من أموال مالكه غير المدين. 2 - إذا بيع العقار المرهون المكفول به عينيًّا، فلمالكه
- Article 28
The article lets the mortgagee begin compulsory expropriation and sale of the mortgaged property if the debtor does not pay by the agreed time, after notifying the debtor and the possessor in accordance with the Enforcement Law.
للمرتهن أن يتخذ إجراءات النزع الجبري لملكية العقار المرهون وبيعه إذا لم يقم المدين بالوفاء في الأجل المعين، وذلك بعد إنذار المدين وحائز العقار المرهون وفقًا لنظ
- Article 31
The article refers the procedures for compulsory expropriation and sale of the mortgaged property, when the debt is not paid, to the Enforcement Law.
تتم إجراءات النزع الجبري لملكية العقار المرهون وبيعه عند عدم الوفاء بالدين وفقًا لنظام التنفيذ.
- Article 32
The article lets the possessor of a mortgaged property enter its auction; if the possessor wins and pays the price, the possessor is regarded as owner under the original ownership document, and the property is cleared of every registered right.
يجوز لحائز العقار المرهون أن يدخل في إجراءات بيعه في المزاد، فإذا رسا المزاد عليه وأدى الثمن، عُدَّ مالكًا للعقار بمقتضى وثيقة ملكيته الأصلية، ويتطهر العقار الم
- Article 33
If the auction of a mortgaged property is awarded to someone other than its possessor, that person acquires ownership under the decision awarding the auction and receives the right from the possessor, whether or not the possessor entered the auction.
إذا رسا مزاد بيع العقار المرهون على غير حائزه، فإنه يكسب ملكيته بمقتضى قرار رسوّ المزاد عليه، ويتلقى حقه من الحائز، سواء أدخل الحائز في المزاد أم لم يدخل.
- Article 34
If the price of the mortgaged property exceeds the value of the registered debts, the excess belongs to the owner.
إذا زاد ثمن العقار المرهون على قيمة الديون المسجلة، كانت الزيادة للمالك.
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.