Article 40 of the Saudi Registered Real Estate Mortgage Law
المادة 40 من نظام الرهن العقاري المسجل
A registered mortgage is extinguished by merger of rights, when the right of mortgage and the right of ownership come together in one person, and returns if the cause of the merger ceases retroactively.
Official text (Arabic)
This article has not been amended since the law was issued.
ينقضي الرهن المسجل باتحاد الذمة، باجتماع حق الرهن مع حق الملكية في يد شخص واحد، سواءً أكان بانتقال ملكية العقار المرهون إلى المرتهن، أم بانتقال حق المرهون إلى الراهن. فإذا زال سبب اتحاد الذمة وكان لزواله أثر رجعي، عاد الرهن إلى حالته.
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 40 explained in plain English
This article provides for the extinction of a registered mortgage by merger of rights, which it defines as the right of mortgage and the right of ownership coming together in one person.
According to the article, merger occurs in one of two ways:
- Ownership of the mortgaged property passes to the mortgagee, for example when the mortgagee creditor buys the property mortgaged to it.
- The right in the mortgaged property passes to the mortgagor, that is, the mortgage right comes to the mortgagor itself.
In both cases the holder of the mortgage right and the owner become one person, and the registered mortgage is extinguished.
Return of the mortgage: if the cause of the merger ceases, and its ceasing has retroactive effect, the mortgage returns to its former state. The return of the mortgage here is conditional on the cessation of the cause having retroactive effect.
This article sits alongside Article 39, which provides for the extinction of a registered mortgage by compulsory sale of the property and payment of its price to the mortgagees or its deposit in a bank account of the court, and Article 41, which provides for its extinction by the mortgagee's documented waiver of it.
To assess whether the ceasing of the cause of a merger has retroactive effect in a particular case, the person concerned would do well to consult a lawyer specializing in real estate cases.
Practical example
A bank in Riyadh holds a registered mortgage on a plot of land, and ownership of the land itself then passes to the bank when it buys it from its owner. With the right of mortgage and the right of ownership coming together in the hands of the bank, the registered mortgage is extinguished. If the cause of that later ceases and its ceasing has retroactive effect, the mortgage returns to its former state.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentReal Estate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Real Estate Law lawyers
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 40 of the Saudi Registered Real Estate Mortgage Law
What does merger of rights mean in a real estate mortgage?
It is the right of mortgage and the right of ownership coming together in one person, either by ownership of the mortgaged property passing to the mortgagee, or by the right in the mortgaged property passing to the mortgagor.
If the bank buys the property mortgaged to it, does the mortgage remain?
Ownership of the mortgaged property passing to the mortgagee is one form of merger of rights, and the registered mortgage is extinguished by it.
Can the mortgage return after a merger of rights?
Yes. If the cause of the merger ceases and its ceasing has retroactive effect, the mortgage returns to its former state.
More articles on Ending and Releasing the Mortgage
- Article 37
The mortgage follows the debt, so it is released when the whole secured debt is extinguished and returns if the debt returns, without prejudice to rights acquired in good faith by others in between.
1 - الرهن تابع للدين، فينفكّ الرهن بانقضاء جميع الدين الموثق به. 2 - إذا كان الدين قد انقضى ثم عاد لأي سبب موجب لبقائه، رجع الرهن كما كان برجوع الدين، دون مساس
- Article 38
On early repayment of the debt or part of it, a part of the debt is deducted under the early repayment standards in the Finance Companies Control Law; if the court sells the property before the term ends, it pays the due installments to the creditor and deposits the rest in its bank account.
1 - إذا سدد الدين أو بعضه قبل أجله باتفاق المتعاقدين، أو بحكم العقد، أو النظام، أو القضاء؛ فيحط جزء من الدين طبقًا لمعايير السداد المبكر المنصوص عليها في نظام م
- 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.
- Article 41
A registered mortgage is extinguished when the mortgagee waives it by a documented waiver, and the mortgagee may waive the mortgage right while the debt remains.
ينقضي الرهن المسجل إذا تنازل المرتهن عنه تنازلاً موثقًا، وله أن يتنازل عن حق الرهن مع بقاء الدين.
- Article 42
A registered mortgage is extinguished by the destruction of its subject, subject to the provisions on destruction of the mortgage set out in the law.
ينقضي الرهن المسجل بهلاك محلّه، وتراعى أحكام هلاك الرهن المنصوص عليها في هذا النظام.
- Article 43
The mortgagor and the possessor may request release of the mortgage after the period for hearing a claim on the debt secured by the mortgage, set out in other laws, has elapsed.
للراهن والحائز طلب فك الرهن بعد انقضاء مدة سماع دعوى الدين الموثق به الرهن المنصوص عليها في الأنظمة الأخرى.
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.