In implementation of what is stipulated in Article (36) of the Implementing Regulation of the Sale and Lease of Real Estate Projects on the Map, issued by the decision of the Board of Directors of the Real Estate General Authority No. (Q/M/E/H/8/2024/T) dated 20/10/1445 AH, this evidence has been prepared to detail the procedures for dealing with delayed or troubled sale and lease projects on the map, and the mechanisms and methods for addressing those projects, through the application of best practices to protect the parties involved in those projects, and to address the challenges facing real estate development projects on the map.

1.1 Scope of Application 

This guide is directed to the employees of the Real Estate General Authority concerned with real estate projects on the map, and to the private sector specialists in developing real estate projects on the map.

2.1 Exceptions to Application

This guide is specifically concerned with delayed and stalled real estate projects, which are covered by the provisions of the system for selling and leasing real estate projects on the map.

3.1 Definitions

• 1.3.1 Authority: Real Estate General Authority.

• 2.3.1 Committee: The committee responsible for overseeing the handling of delayed and stalled real estate projects.

• 3.3.1 Project Parties: The real estate developer of the project, the supervising engineering consulting office, and the legal accountant.

• 4.3.1 Stakeholders: Buyers, tenants, and financiers of the developed real estate units on the map.

• 5.3.1 Cash Flows: Deposits of stakeholders in the guarantee account according to the achievement ratios, amounts due from stakeholders that have not been deposited, and the remaining amounts to complete the project.

The procedures outlined for addressing delays must be followed within the specified timeframe for project completion, or the additional time granted. If the delay is not addressed within the specified timeframe for completion, or the additional time granted, the project will be treated as a stalled project.

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1, 3 Required Documents for Processing

• 1, 1, 3 Required Documents for Addressing Delays:

  • 1, 1, 1, 3 Minor Delay:

    • A- Submission of a written statement from the developer explaining the reasons for the delay and a plan for managing the correction of the project’s course.

    • B- A technical report from the consulting office supervising the project, which includes at least:

      • 1- An assessment of the technical status of the project according to the project scopes, and a statement of the units sold in each scope of the project.

      • 2- Reasons for the delay.

      • 3- A statement of the number of workers in the project.

      • 4- Proposed corrective measures.

    • C- A report from the legal accountant supervising the project, which includes at least:

      • 1- A statement of the number of units sold.

      • 2- Cash flows in the project and future collection mechanisms.

      • 3- Sources of funding.

      • 4- Proposed corrective measures.

    • D- A guarantee account statement from the bank for the entire project period.

    • E- A report from the relevant department in the authority regarding the number and type of complaints received, and the extent of the developer's commitment to addressing them.

  • 2, 1, 1, 3 Moderate Delay:

    • A- Submission of a written statement from the developer explaining the reasons for the delay and a plan for managing the correction of the project’s course.

    • B- A technical report from the consulting office supervising the project, which includes at least:

      • 1- An assessment of the technical status of the project according to the project scopes and a statement of the units sold in each scope of the project.

      • 2- Reasons for the delay.

      • 3- A statement of the number of working hours, the actual number of workers in the project, and a comparison with the planned values.

      • 4- A photographic report documenting the status of the project.

      • 5- A report on the status of public utility connections and their activation.

      • 6- Proposed corrective measures.

    • C- A report from the legal accountant supervising the project, which includes at least:

      • 1- A statement of the number of units sold.

      • 2- Cash flows in the project and future collection mechanisms.

      • 3- Sources of funding.

      • 4- Proposed corrective measures.

    • D- A guarantee account statement from the bank for the entire project period.

    • E- A report from the relevant department in the authority regarding the number and type of complaints received, and the extent of the developer's commitment to addressing them.

  • 3, 1, 1, 3 Severe Delay:

    • A- Submission of a written statement from the developer explaining the reasons for the delay and a plan for managing the correction of the project’s course.

    • B- A technical report from the consulting office supervising the project, which includes at least:

      • 1- A detailed report on the technical status of the project according to the project scopes and a statement of the units sold in each scope of the project.

      • 2- A statement of the expected costs to complete the project, for each scope separately and the total expected cost to finish the project.

      • 3- Reasons for the delay.

      • 4- A statement of the number of working hours, the actual number of workers in the project, and a comparison with the planned values.

      • 5- A photographic report documenting the status of the project.

      • 6- A report on the status of public utility connections and their activation.

      • 7- Proposed corrective measures.

    • C- A report from the legal accountant supervising the project, which includes at least:

      • 1- A statement of the number of units sold.

      • 2- Cash flows in the project and future collection mechanisms.

      • 3- Sources of funding.

      • 4- Proposed corrective measures.

    • D- A guarantee account statement from the bank for the entire project period.

    • E- A report from the relevant department in the authority regarding the number and type of complaints received, and the extent of the developer's commitment to addressing them.

• 2, 1, 3 Required Documents for Addressing Stalling:

  • A- Submission of a written statement from the developer explaining the reasons for the stalling and a plan for managing the correction of the project’s course.

  • B- A technical report from the consulting office supervising the project, which includes at least:

    • 1- A detailed report on the technical status of the project according to the project scopes and a statement of the units sold in each scope of the project.

    • 2- A statement of the expected costs to complete the project, for each scope separately and the total expected cost to finish the project.

    • 3- Reasons for the stalling.

    • 4- A statement of the number of working hours, the actual number of workers in the project, and a comparison with the planned values.

    • 5- A photographic report documenting the status of the project.

    • 6- A report on the status of public utility connections and their activation.

    • 7- Proposed corrective measures.

  • C- A report from the legal accountant supervising the project, which includes at least:

    • 1- A statement of the number of units sold.

    • 2- Cash flows in the project and future collection mechanisms.

    • 3- Sources of funding.

    • 4- Proposed corrective measures.

  • D- A guarantee account statement from the bank for the entire project period.

  • E- A report from the relevant department in the authority regarding the number and type of complaints received, and the extent of the developer's commitment to addressing them.

2, 3 Methods and Techniques for Processing

• 1, 2, 3 Methods for Addressing Delays

• The relevant department in the authority will submit to the committee the technical opinion and recommendation - accompanied by the legal opinion - based on the requirements mentioned in item (1, 1, 3) requesting the committee's decision to approve the application of the following:

  • 1, 1, 2, 3 Obliging the developer to implement one or more methods for addressing delays, according to their degree:

    • 1, 1, 1, 2, 3 In the case of a minor delay:

      • A- Increasing the number of workers on the project.

      • B- Increasing the number of staff in the consulting office on the project.

      • C- Limiting construction work to the units sold only.

    • 2, 1, 1, 2, 3 In the case of a moderate delay:

      • A- Changing the project timeline.

      • B- Modifying the characteristics and specifications of the units and the project, without infringing on the rights of stakeholders.

      • C- Increasing the number of workers on the project.

      • D- Increasing the number of staff in the consulting office on the project.

      • E- Limiting construction work to the units sold only.

      • F- Restricting the sales license to the units sold in the project only.

      • G- Limiting sales operations in the project scopes to phases, according to the developer's progress in actual completion rates.

    • 3, 1, 1, 2, 3 In the case of a severe delay:

      • A- Changing the project timeline.

      • B- Modifying the characteristics and specifications of the units and the project, without infringing on the rights of stakeholders.

      • C- Increasing the number of workers on the project.

      • D- Increasing the number of staff in the consulting office on the project.

      • E- Limiting construction work to the units sold only.

      • F- Restricting the sales license to the units sold in the project only.

      • G- Limiting sales operations in the project scopes to phases, according to the developer's progress in actual completion rates.

      • H- Changing the consulting office on the project.

      • I- Changing the contractor on the project.

      • J- Modifying the license to divide the project units into more than one license.

  • 2, 1, 2, 3 Monthly Follow-up

  • The relevant department will follow up on the project monthly through field visits and reviewing reports submitted by project parties.

  • 3, 1, 2, 3 Periodic Update

  • The relevant department will prepare a technical report for the committee monthly to measure the developer's compliance with the adopted corrective methods, including a comparison of the project performance index (SPI).

• 2, 2, 3 Methods for Addressing Stalling

• The relevant department in the authority will submit to the committee the technical opinion and recommendation - accompanied by the legal opinion - based on the requirements mentioned in item (2, 1, 3) requesting the committee's decision to approve the application of the following:

  • 1, 2, 2, 3 In the case of technical stalling

    • 1, 1, 2, 2, 3 Obliging the developer to implement one or more of the following methods:

      • A- Changing the project timeline.

      • B- Modifying the characteristics and specifications of the units and the project, without infringing on the rights of stakeholders.

      • C- Preparing an updated feasibility study for the project in its current state, including marketing plans and target categories.

      • D- Increasing the number of workers on the project.

      • E- Increasing the number of staff in the consulting office on the project.

      • F- Limiting construction work to the units sold only.

      • G- Restricting the sales license to the units sold in the project only.

      • H- Limiting sales operations in the project scopes to phases, according to the developer's progress in actual completion rates.

      • I- Changing the consulting office on the project.

      • J- Changing the contractor on the project.

      • K- Modifying the license to divide the project units into more than one license.

    • 2, 1, 2, 2, 3 Monthly Follow-up

    • The relevant department will follow up on the project monthly through field visits and reviewing reports submitted by project parties.

    • 3, 1, 2, 2, 3 Periodic Update

    • The relevant department will prepare a technical report for the committee monthly to measure the developer's compliance with the adopted corrective methods, including a comparison of the project performance index (SPI).

    • 2, 2, 2, 3 In the case of financial stalling

    • 1, 2, 2, 2, 3 The procedures outlined in Chapter (Four) will be followed

    • 2, 2, 2, 2, 3 Monthly Follow-up

    • The relevant department will follow up on the project monthly through reviewing reports submitted by project parties.

    • 3, 2, 2, 2, 3 Periodic Update

    • The relevant department will prepare a technical report for the committee monthly to measure the developer's compliance with the adopted corrective methods, including a comparison of the project performance index (SPI).

3, 3 Main Intervention Tools for Addressing Delays or Stalling

If the application of the corrective methods mentioned in item (2, 3) does not result in an increase in the completion rate in line with the timeline and the project performance index (SPI), the relevant department will prepare a study with the relevant departments regarding dealing with stakeholders, and measuring the expected impact of applying the main intervention tools to address the project, and submit it to the committee requesting approval to apply one or more - after consulting with the legal accountant and the consulting office - of the following tools:

• 1, 3, 3 Main Intervention Tools for Addressing Delays and Stalling:

  • 1, 1, 3, 3 Appointing a qualified person to manage the relationship with the developer, to address the stalling of the real estate project through the procedures outlined in Chapter (Six), upon the occurrence of one of the following cases:

    • A- The developer does not respond to the implementation of the prescribed corrective methods.

    • B- There is a dispute between the project parties, or between the developer and the landowner.

  • 2, 1, 3, 3 Examining and monitoring the work of project parties, through the procedures outlined in Chapter (Six) upon the occurrence of one of the following cases:

    • A- If there is a conflict in the data provided by project parties.

    • B- If the relevant department observes a conflict between the submitted reports and the work completed in the project, through the field visit reports of the relevant authority's representative.

  • 3, 1, 3, 3 Disbursing amounts from the real estate project guarantee account if necessary to correct the project's course, according to the following cases:

    • A- The refusal or delay of one of the project parties to disburse for the benefit of the project.

    • B- Disbursing the dues of project parties when due, and the developer's lack of cooperation.

    • C- Disbursing advance payments higher than the actual completion percentage of construction works.

  • 4, 1, 3, 3 Obliging the developer to replace those responsible for the stalling of the real estate project, according to the following cases:

    • A- If it is found that one of the project parties, or one of their affiliates has a direct relationship in delaying the work in the project.

    • B- If it is found that one of the project parties, or their affiliates does not respond to the implementation of the prescribed corrective methods.

  • 5, 1, 3, 3 Appointing a replacement developer upon the occurrence of one of the following cases:

    • A- If it is proven that the developer is unable to complete the project.

    • B- The developer does not respond to the implementation of the prescribed corrective methods.

    • C- In the event of the developer's bankruptcy.

    • D- In the event of the developer's lack of financial solvency, or the absence of funding sources for the project.

  • 6, 1, 3, 3 Refund of amounts paid for the real estate project

    • If the authority deems it impossible to complete the project, and it is proven that the developer is unable to complete the project, provided that there are amounts in the guarantee account sufficient to cover the deposits of buyers or tenants.

  • 7, 1, 3, 3 Amicable liquidation upon the occurrence of one of the following cases:

    • A- If the authority deems it unfeasible to apply the available methods for addressing stalling.

    • B- In the event that the project is affected by government decisions related to suspensions or changing the use of the project land.

This is a process aimed at improving the financial situation of the project, to ensure the continuity of financial flows in the project, by implementing changes to enhance the overall status of the project, after the relevant management in the authority studies the project data, based on the requirements mentioned in item (2, 1, 3).

1, 4 Options for Financial Restructuring and Bridging Funding Gaps

• 1, 1, 4 The relevant management in the authority evaluates and studies the financial situation of the project, and measures cash flows to determine the type of financial distress in the project, upon the occurrence of one of the following cases:

  • A- Weak project sales.

  • B- The mismatch of due payments in the project with the actual stages of achievement.

  • C- The failure to implement the financial solutions specified in the project's feasibility study.

• 2, 1, 4 The relevant management in the authority submits to the committee the technical opinion and recommendation - accompanied by the legal opinion - based on the evaluation results in item (1, 1, 4) requesting the committee's decision to approve the implementation of the following:

  • 1, 2, 1, 4 Obliging the developer to undertake one or more of the following solutions:

    • A- Implementing the financial solutions specified in the project's feasibility study.

    • B- Providing an updated feasibility study with the new data in the project, including solutions to address the financial distress in the project.

    • C- Self-financing the project, or through financing agreements.

    • D- Presenting a partnership plan with the public or private sector specified within a timeframe.

    • E- Presenting a plan in coordination with one of the real estate investment funds, specified within a timeframe.

    • F- Changing the payment schedule or the schedule of relative weights, in accordance with the stages of project completion.

    • G- Restricting disbursement operations from the project guarantee account to construction operations only.