Article 20 of the Saudi Registered Real Estate Mortgage Law
المادة 20 من نظام الرهن العقاري المسجل
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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، ما لم تكن المدة أقل من خمس سنوات فينفذ حينئذٍ عقد الإيجار ولو سجل بعد عقد الرهن.
2 - إذا كان العقار المرهون غير مسجلٍ وفقًا لنظام التسجيل العيني للعقار، فيلتزم الراهن بالإفصاح - في عقد الرهن- عن أي حق عيني أصلي أو تبعي على العقار المرهون، فإن ظهرت حقوق مؤثرة على حق المرتهن نتيجة عدم الإفصاح فعليه تعويض المرتهن عما لحقه من ضرر، فإن كان الراهن سيئ النية فتحرك ضده الدعوى الجزائية وفقاً لنظام مكافحة التزوير.
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 20 explained in plain English
This article addresses two matters depending on the registration status of the mortgaged property:
First: property registered under the Real Estate Registration Law. A lease contract concluded by the mortgagor does not bind the mortgagee unless it was registered before the mortgage contract was registered. An exception is a lease with a term of less than five years, which binds the mortgagee even if registered after the mortgage contract.
Second: property not registered under the Real Estate Registration Law. The mortgagor must disclose in the mortgage contract any principal or accessory right in rem on the mortgaged property. The consequences of failing to do so are:
- If rights that affect the mortgagee's right emerge as a result of the non-disclosure, the mortgagor must compensate the mortgagee for the harm suffered.
- If the mortgagor acted in bad faith, a criminal action is brought against the mortgagor in accordance with the Anti-Forgery Law.
This article is connected to Article 21, which provides that the effect of a registered mortgage applies against third parties from the date of its registration, unless the third party had acquired a right in rem on the property before that. Because these provisions affect tenants and mortgagees alike, anyone who is a party to a lease of a mortgaged property, or to a mortgage of a property that carries prior rights, should consult a lawyer specializing in real estate and real estate finance cases.
Practical example
Khalid mortgaged a commercial building in Riyadh that is registered under the registration law, then leased one of its shops for three years after the mortgage was registered. This lease binds the mortgagee because its term is less than five years. If he had leased it for ten years after the mortgage was registered, it would not bind the mortgagee.
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 20 of the Saudi Registered Real Estate Mortgage Law
Is the mortgagee bound by a lease concluded by the mortgagor?
For property registered under the registration law, the lease binds the mortgagee only if it was registered before the mortgage was registered, unless its term is less than five years, in which case it binds the mortgagee even if registered afterward.
What are the consequences of concealing rights on a property when mortgaging it?
If rights that affect the mortgagee emerge as a result of non-disclosure, the mortgagor must compensate the mortgagee, and if the mortgagor acted in bad faith, a criminal action is brought under the Anti-Forgery Law.
When must the mortgagor disclose rights on the property?
The mortgagor must disclose them in the mortgage contract if the property is not registered under the Real Estate Registration Law.
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 12
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.
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 ال
- 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
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.