Article 3 of the Saudi Registered Real Estate Mortgage Law
المادة 3 من نظام الرهن العقاري المسجل
The Article makes a non-owner's mortgage suspended pending a documented ratification by the owner, with the mortgage starting from that date; absent ratification, it takes effect only once the mortgagor acquires the property.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا كان الراهن غير مالك للعقار المرهون، كان رهنه موقوفًا على إجازة موثقة من المالك، ويبدأ الرهن من تاريخ الإجازة. فإذا لم تصدر هذه الإجازة، فإن حق الرهن لا يترتب على العقار إلا من الوقت الذي يصبح فيه هذا العقار مملوكًا للراهن.
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 3 explained in plain English
This Article deals with a special situation: a person mortgages a property he does not own. The rule in the second Article is that the mortgagor must be the owner of the property and have capacity to dispose of it, so a non-owner's mortgage does not take effect directly, but is suspended pending a later matter.
The Article sets two paths:
- If the owner ratifies the mortgage by a documented ratification, the mortgage is valid, and starts from the date of the ratification, not from the date of the contract.
- If no ratification is given, the mortgage right attaches to the property only from the time the property becomes owned by the mortgagor.
Note that the Article requires the ratification to be documented; mere oral agreement is not enough. Fixing the date the mortgage starts is important, because the mortgage does not stand on the property before that date.
The fourth Article sets the conditions that must be met in the mortgaged property itself, such as being specific and known and capable of being sold. Anyone in the position of mortgaging a property whose ownership is not yet complete would do best to consult a lawyer specialized in real estate and real estate finance matters.
Practical example
Saad mortgaged to his creditor a plot in Dammam that he was negotiating to buy from its owner, and ownership had not yet passed to him. If the owner ratifies this mortgage by a documented ratification, the mortgage starts from the date of the ratification, and if he does not, the mortgage attaches to the plot only when it becomes Saad's 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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Frequently asked questions about Article 3 of the Saudi Registered Real Estate Mortgage Law
Is a mortgage of a property owned by someone else valid?
The mortgage is suspended pending a documented ratification by the owner, and starts from the date of the ratification.
What happens if the owner does not approve the mortgage?
If no ratification is given, the mortgage right attaches to the property only from the time the property becomes owned by the mortgagor.
Is the owner's oral approval enough?
The Article provides for a documented ratification by the owner.
More articles on Mortgagor and Mortgaged Property Conditions
- Article 2
The Article requires the mortgagor to own the property and have capacity to dispose of it, and permits the mortgagor to be the debtor or a real surety who mortgages his property for the debtor's benefit.
1- يجب أن يكون الراهن مالكاً للعقار المرهون، وأهلاً للتصرف فيه. 2- يجوز أن يكون الراهن المدين نفسه، أو كفيلاً عينيًّا يقدّم عقارًا يرهنه لمصلحة المدين ولو بغير
- Article 4
The Article requires the mortgaged property to be specific, existing or likely to exist, known and stated in the contract and saleable at auction, and permits mortgaging the property's usufruct separately from the property.
1 - يجب أن يكون العقار المرهون معينًا موجودًا، أو محتمل الوجود مما يصح بيعه. 2 - يجب أن يكون العقار المرهون معلومًا علمًا نافيًا للجهالة مبيّنًا في عقد الرهن نف
- Article 5
The Article provides that the mortgage covers the mortgaged property's appurtenances, namely buildings, plantings, what is prepared to serve it and what is added after the contract, unless otherwise agreed and without prejudice to third parties' rights.
يشمل الرهن ملحقات العقار المرهون من أبنية، وغراس، وما أعد لخدمته، وما يستحدث عليه من إنشاءات أو تحسينات بعد العقد، ما لم يتفق على غير ذلك، دون إخلال بحقوق الغير
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.