Article 4 of the Saudi Registered Real Estate Mortgage Law
المادة 4 من نظام الرهن العقاري المسجل
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 نفسه، أو في عقد لاحق، ويصح بيعه استقلالاً بالمزاد العلني.
3 - يجوز رهن منفعة العقار منفصلة عن الأصل، وتأخذ أحكام رهن الأصل وتسجيله.
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 4 explained in plain English
After the previous articles set the conditions for the mortgagor, this Article sets the conditions for the mortgaged property itself, which are:
- That it be specific and existing, or likely to exist, and be something that may be sold. The Article does not limit the mortgage to a property that already exists, but permits mortgaging what is likely to exist if it is something that may be sold.
- That it be known in a way that removes uncertainty, that is, identified in a way that prevents confusion, and stated in the mortgage contract itself or in a later contract.
- That it may be sold on its own at public auction, because the purpose of the mortgage is that the debt be collected from its price if there is no payment.
The third paragraph adds an important provision: the usufruct of a property may be mortgaged separately from the property itself, and in that case the usufruct takes the provisions of mortgaging the property and registering it, that is, the same rules apply to it.
This Article complements the third Article, which deals with a non-owner's mortgage, and the fifth Article, which explains that the mortgage covers the property's appurtenances. Because identifying the property in the contract affects the validity of the mortgage, it is useful to consult a lawyer specialized in real estate and real estate finance matters before signing.
Practical example
A company in Riyadh holds the right of usufruct of a commercial building for a long period, and wants to obtain financing. It may mortgage this usufruct separately from ownership of the building, and the provisions of mortgaging the property and registering it apply to this mortgage, provided the usufruct is clearly described in the contract.
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 4 of the Saudi Registered Real Estate Mortgage Law
Can an unfinished property, or one that does not yet exist, be mortgaged?
The Article permits mortgaging a property likely to exist that may be sold, provided it is known in a way that removes uncertainty.
Can the usufruct of a property be mortgaged without owning it?
Yes. The usufruct of a property may be mortgaged separately from the property itself, and it takes the provisions of mortgaging the property and registering it.
Where must the mortgaged property be identified?
It must be stated in the mortgage contract itself or in a later contract.
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 3
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.
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 يترت
- 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.