- This law is considered one of the real estate laws of great importance due to the rapid development witnessed in the real estate market, which has resulted in various forms of new multi-party contracts in sale, lease, purchase, development, and real estate financing, including what is known as off-plan sales. The law aims to regulate the processes of sale and lease for real estate projects intended for development, whether they are developed lands or real estate units off-plan, and it contributes to protecting the rights of all parties, sustaining real estate development activities, and enhancing their quality.
- Real estate development involves the construction of residential, commercial, office, service, industrial, tourism, or other real estate projects, carried out by a legal entity licensed to engage in the activity of owning or leasing real estate for the purpose of developing, selling, or leasing it, referred to as the real estate developer. The regulator has allowed the developer to be a natural person after obtaining a license from the Real Estate General Authority, provided that the license applicant meets the standards and requirements set by the authority.
- According to the provisions of the law, any real estate developer is not permitted to engage in the sale and lease of off-plan real estate projects unless registered in the developers' registry. The regulator has also prohibited advertising real estate projects in the media, holding exhibitions for them, or inviting to them unless the real estate project has been licensed by the Real Estate General Authority in accordance with the law and its implementing regulation.
- The law clarifies the tasks assigned to the Real Estate General Authority, as it is the competent authority stipulated in the law. It has been entrusted with supervisory tasks over real estate projects, issuing the necessary licenses for them, monitoring and inspecting them, establishing a special registry called the developers' registry, and creating one or more committees to consider violations of the provisions of the law and the regulation.
- The law also addresses the requirements that a developer wishing to sell or lease off-plan real estate projects must submit to the Real Estate General Authority to obtain a special license for the real estate project. The authority must decide on the application within 30 days from the date of completion of the required documents. If the period expires without a decision on the application, this is considered approval of the application. In the event of a rejection decision, it must be justified.
- The default is that registration in the developers' registry is for the real estate developer with a legal entity licensed to engage in the activity of owning or leasing real estate for the purpose of developing, selling, or leasing it as applicable. However, the regulator has allowed the authority to register a natural person in the developers' registry and license them to engage in the sale and lease of off-plan real estate projects, according to the controls set by the law and the regulation.
- The regulator has mandated that each real estate project must have a dedicated bank account called the escrow account, into which the amounts paid by the funders of the real estate project, or buyers, or tenants of the project are deposited. This account is activated after obtaining a special license for the real estate project and is designated for the purposes of disbursement on the licensed real estate project, according to procedures stipulated by the law and under the signature of a certified accountant and a consulting office, and under the supervision of the Real Estate General Authority.
- The regulator has also obligated the real estate developer to complete the real estate project within the specified time for its completion. The developer is considered delayed in executing the project if the project is not completed after the expiration of its term without a reason beyond their control. In the event of a delay in delivering the land or real estate unit without a reason beyond their control, the buyer is entitled to financial compensation predetermined if it is developed land, based on an agreement between the parties of no less than 2% of the sale value, calculated on an annual basis. If it is a real estate unit, the compensation is based on the agreement of the parties, not to be less than the equivalent rent for the unit.
- The law and regulation have established a set of procedures to limit the failure of real estate projects and ensure they are not delayed. The regulation has arranged a number of necessary procedures and arrangements, technical guidelines, and methods that must be followed to address delays or failures and correct their completion, without infringing on the rights of buyers or tenants.
- A committee or more is responsible for considering violations of the provisions of the law and the regulation, formed by a decision from the head of the authority for a period of 3 years, renewable, consisting of no less than three members. The decision forming it specifies who will preside over it, and they must be specialists in Sharia or regulations. Its decisions are issued by majority, must be justified, and are approved by the responsible person. Decisions can be appealed before the administrative court within 60 days from the date of notification of the decision.
- The committee does not consider serious violations according to the provisions of the law and the regulation, and the Public Prosecution is responsible for conducting investigations and prosecution in such cases. The implementing regulation of the law clarifies that serious violations are the acts stipulated in Article 24 of the law, and acts related to fraud, deception, or manipulation, or betrayal, which were intentional and deliberate, or resulted in severe harm to human health or safety, public health, the environment, or public facilities.
- It was also noted that the implementing regulation of the law was issued in the month of Shawwal 1445 AH, and the decision to issue it stipulated that it would be effective from the date of enforcement of the law, which was after 90 days from the date of its publication in the official gazette.
- In conclusion, by visiting the website of the Real Estate General Authority, the link to which is provided at the end of this publication, you can review the law and its implementing regulation, as well as everything related to real estate laws, their implementing regulations, procedural and technical guidelines, and the supporting platforms http://rega.gov.sa