Article 24 of the Saudi Registered Real Estate Mortgage Law
المادة 24 من نظام الرهن العقاري المسجل
The article permits a registered property to be mortgaged to several mortgagees in succession, fixes rank by registration number and date until its extinction is recorded, and pays their rights from the price according to rank.
Official text (Arabic)
This article has not been amended since the law was issued.
يجوز رهن العقار المسجل لعدد من المرتهنين بالتتابع، وتحدد مرتبة الرهن برقم قيده وتاريخ تسجيله، ويحتفظ بمرتبته حتى يقيد ما يدل على انقضائه في الجهة المختصة نظامًا بالتسجيل.
وتستوفى حقوق المرتهنين من ثمن العقار المرهون، أو من المال الذي حل محله وفقًا لمرتبة كل واحد منهم.
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 24 explained in plain English
This article answers the question: may the same property be mortgaged to more than one creditor? The answer is yes: a registered property may be mortgaged to a number of mortgagees in succession, that is, one mortgage after another.
The article regulates the relationship among these mortgagees with clear rules:
- Fixing rank: the rank of each mortgage is determined by its registration number and date.
- Keeping rank: the mortgage keeps its rank until something showing its extinction is recorded with the authority competent by law to register.
- Method of payment: the mortgagees' rights are paid from the price of the mortgaged property, or from the money that replaced it, according to the rank of each of them.
The practical result is that the holder of the earlier rank recovers first from the price, then the next, and so on. Anyone who accepts being a later mortgagee therefore bears the possibility that the price will not suffice after those ahead of them are paid.
This article is connected to Article 23, which requires the transfer of the debt or waiver of rank to be recorded in the original mortgage document and the property record in order to be invoked against non-parties, and to Article 25, which allows a mortgagee to waive the rank of its mortgage, to the extent of its debt, in favor of another mortgagee under the rules on assignment of rights. Anyone accepting a later mortgage on a property should consult a lawyer specializing in real estate and real estate finance cases.
Practical example
Sami mortgaged his land in Riyadh to a first financing provider, then mortgaged it to a second creditor. When the land is sold, the first mortgagee recovers its debt from the price first because its registration is earlier, and the second creditor then recovers from the remainder.
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 24 of the Saudi Registered Real Estate Mortgage Law
Can a property be mortgaged to more than one creditor?
Yes. A registered property may be mortgaged to a number of mortgagees in succession.
How is the priority among mortgagees determined?
The rank of a mortgage is determined by its registration number and date, and rights are paid from the price of the property, or what replaced it, according to the rank of each of them.
When does a mortgage's rank end?
The mortgage keeps its rank until something showing its extinction is recorded with the authority competent by law to register.
More articles on Mortgage Rank and Multiple Mortgagees
- Article 21
The article provides that the effect of a registered mortgage applies against third parties from the date of its registration, unless the third party acquired a right in rem on the property before the mortgage was registered.
يسري أثر الرهن المسجل في مواجهة الغير من تاريخ تسجيله، ما لم يكن هذا الغير قد اكتسب حقًا عينيًّا على العقار المرهون قبل تسجيل الرهن.
- Article 23
The article provides that transferring a debt secured by a registered mortgage, or waiving its rank, can be invoked against non-parties only after being recorded in the original mortgage document and the property record.
لا يحتج في مواجهة غير المتعاقدين بنقل الدين المضمون بالرهن المسجل، أو التنازل عن مرتبته إلا بعد قيد ذلك في وثيقة الرهن الأصلي وسجل العقار.
- Article 25
The article lets a mortgagee waive the rank of its mortgage, to the extent of its debt, in favor of another mortgagee on the same property, under the rules on assignment of rights.
يجوز للدائن المرتهن أن يتنازل عن مرتبة رهنه بمقدار دينه لدائن مرتهن آخر على العقار المرهون وفقًا للأحكام المقررة في حوالة الحق.
- Article 39
A registered mortgage is extinguished by a compulsory sale of the mortgaged property under the law and payment of the price to the mortgagee creditors according to their ranks, or its deposit in a bank account of the court.
ينقضي الرهن المسجل ببيع العـقار المرهون بيعًا جبريًا وفقًا للنظام، ودفع ثمنه إلى الدائنين المرتهنين وفقًا لمرتبة كل منهم، أو إيداعه في حساب بنكي للمحكمة.
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.