Article 27 of the Saudi Registered Real Estate Mortgage Law
المادة 27 من نظام الرهن العقاري المسجل
The article defines the possessor of a mortgaged property as anyone to whom, after the mortgage, ownership or another mortgageable right in rem in the property has passed, without personal liability for the secured debt.
Official text (Arabic)
This article has not been amended since the law was issued.
يعد حائزًا للعقار المرهون كل من انتقلت إليه بعد الرهن - بأي سبب من الأسباب - ملكية هذا العقار، أو أي حق عينيٍّ آخر عليه قابل للرهن دون أن يكون مسؤولاً مسؤولية شخصية عن الدين المضمون بالرهن.
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 27 explained in plain English
This article gives the definition of the possessor of a mortgaged property, an important definition because the law attaches special provisions to the possessor, including that the mortgagee may follow the property into the possessor's hands. A possessor is someone in whom three elements combine:
- The right passed to them after the mortgage: what matters is that the transfer came after the mortgage.
- What passed to them is ownership of the property or any other right in rem in it that is capable of being mortgaged, by any means, such as purchase, gift or otherwise.
- They are not personally liable for the debt secured by the mortgage; the debtor is not regarded as a possessor in this sense.
In practical terms, the possessor is a person who owns the property or a right in it but is not the debtor, and who is nevertheless affected by the mortgage because the property in their hands is burdened by it.
This article complements Article 26, which establishes the mortgagee's right to follow the mortgaged property into the hands of any possessor to recover its right from it when payment falls due according to its rank. It is also connected to Article 28, which allows the mortgagee to take compulsory expropriation and sale proceedings against the property if payment is not made by the agreed time, after notifying the debtor and the possessor in accordance with the Enforcement Law.
Anyone to whom a mortgaged property has passed and who wants to know their position regarding the debt should consult a lawyer specializing in real estate and real estate finance cases.
Practical example
A woman gave her son an apartment in Dammam that was mortgaged to a financing provider to secure her own debt. The son is not personally liable for the debt, but after ownership passes to him he is regarded as a possessor of the mortgaged property.
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
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Frequently asked questions about Article 27 of the Saudi Registered Real Estate Mortgage Law
Who is the possessor of a mortgaged property?
Anyone to whom, after the mortgage, ownership of the property or any other right in rem in it that is capable of being mortgaged has passed, by any means, without being personally liable for the secured debt.
Is the debtor regarded as a possessor?
No, because the definition requires that the possessor not be personally liable for the debt secured by the mortgage.
Does a possessor include someone who inherited or was given the property?
The article covers anyone to whom ownership or a right in rem passed after the mortgage, by any means.
More articles on Possessor of the Mortgaged Property and Clearing
- Article 26
The article gives the mortgagee the right to follow the mortgaged property into the hands of any possessor, to recover its right from it when payment falls due, according to its rank.
للمرتهن حق تتبع العقار المرهون في يد أي حائز له لاستيفاء حقه منه عند حلول الوفاء به وفقًا لمرتبته.
- Article 29
The article lets the possessor of a mortgaged property, after being notified, pay the mortgage debt and expenses and then have recourse against the debtor, stepping into the creditor's rights.
لحائز العقار المرهون أن يؤدي دين الرهن والنفقات بعد إنذاره، على أن يرجع بما أداه على المدين، وله أن يحلّ محل الدائن الذي استوفى دينه فيما له من حقوق.
- Article 30
The article gives the possessor of a mortgaged property the right to clear it of every registered mortgage, which remains until the property is sold, and to have recourse against the debtor for what was paid.
1 - لحائز العقار المرهون حق تطهيره من كل رهن مسجل. 2 - يكون هذا الحق قائمًا للحائز حتى إجراء بيع العقار المرهون، وله أن يعود بما دفعه على المدين.
- 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 35
The possessor of a mortgaged property may object to the debt for which the property was sold, with everything the debtor could have objected with, if the debt was registered after the possessor's ownership document.
لحائز العقار المرهون أن يعترض على الدين الذي بيع العقار بسببه بجميع ما كان يجوز للمدين أن يعترض به إذا كان الدين مسجلاً بعد وثيقة ملكية الحائز.
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.