Article 32 of the Saudi Registered Real Estate Mortgage Law
المادة 32 من نظام الرهن العقاري المسجل
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 المرهون من كل حقّ مسجّل عليه إذا دفع الحائز الثمن الذي رست عليه المزايدة به، أو أودعه في حساب بنكي للمحكمة.
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 32 explained in plain English
This article gives the possessor of a mortgaged property, that is, the person in whose hands the mortgaged property is, the right to enter the proceedings for selling the property at auction, so the possessor may bid for it.
If the auction is awarded to the possessor, two effects follow:
- The possessor is regarded as owner of the property under the original ownership document if the possessor pays the price; that is, ownership rests on the original document, unlike a non-possessor to whom the auction is awarded, who under Article 33 acquires ownership under the decision awarding the auction to them.
- The mortgaged property is cleared of every right registered on it if the possessor pays the price at which the bid was awarded, or deposits it in a bank account of the court.
Clearing here is tied to paying the price at which the bid was awarded, or depositing it in the court's account, not merely to the award of the auction. The article comes in the context of Article 31, which makes the procedures for compulsory expropriation and sale of the mortgaged property subject to the Enforcement Law.
Anyone who holds a mortgaged property and is thinking of entering the auction for its sale would do well to consult a lawyer specializing in real estate or enforcement cases before deciding.
Practical example
Khalid bought land in Riyadh that carries a registered mortgage in favor of a bank, and the land was then put up for auction because the debt was not paid. Khalid entered the auction and it was awarded to him, so he paid the price at which the bid was awarded. He is therefore regarded as owner of the land under his original ownership document, and the land is cleared of every right registered on it.
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 32 of the Saudi Registered Real Estate Mortgage Law
May the buyer of a mortgaged property enter the auction?
Yes. Article 32 allows the possessor of a mortgaged property to enter the proceedings for its sale at auction.
What happens if the auction is awarded to the possessor?
If it is awarded to the possessor and the possessor pays the price, the possessor is regarded as owner of the property under the original ownership document.
When is the property cleared of the rights registered on it?
If the possessor pays the price at which the bid was awarded, or deposits it in a bank account of the court, the property is cleared of every right registered on it.
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 27
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.
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 ش
- 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 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.