The Ministry of Housing has finalized its arrangements to begin implementing the “Ejar” program in the residential and commercial sectors, whereby an accredited real estate broker may register three Saudi employees as additional assistants and authorize them to enter tenant data into the “Ejar” system on their behalf, provided that the agent remains directly responsible for the actions of those registered with him. It should be noted that the Ministry of Housing will allow an increase in the number of registrants per agent in the near future.
Terms of the Initial Contract in “Ejar”
The "Ijar" program, as launched by the Ministry, is intended to be the main driver for development, sustainability, and increased trust to achieve balance in the real estate rental sector. This will be accomplished by regulating and streamlining the procedures of the real estate rental sector through incentive-based systems and mechanisms, and impartial systems and mechanisms to protect rights and maintain the sector’s balance through safe and precise standards.
In its initial form, the contract includes the lease agreement details, as well as information on the landlord and tenant or their representatives. It also includes details of the real estate agency and the broker, in addition to information on title deeds, the property, and the rental units.
The published contract specifies the financial details, the payment schedule, and the obligations of the parties, which are set forth in sixteen articles detailed throughout the contract, to which a detailed schedule explaining certain fields contained therein is attached.
Concluding Electronic Contracts
Engineer Mohammed Al-Bati, General Supervisor of Rental Sector Regulation at the Ministry of Housing, revealed that real estate brokers will soon be able to conclude standardized electronic contracts for the residential sector through «Ijar,» in preparation for its launch, while contracts for the commercial sector will be concluded during the first quarter of 2018, He also noted that the number of real estate brokers registered on the "Ijar" network is steadily increasing, pointing out that a large percentage of real estate brokers have completed the online training course that qualifies them for accreditation in the program, and many of them have begun adding rental units and entering into electronic brokerage agreements with landlords. He noted that real estate brokers can
electronic contract enforceable instrument
Al-Bati explained that the Ministry aims for the services and features available on the Ijar network—most importantly, the protection of the rights of the parties to the rental transaction (landlord, real estate broker, tenant), to serve as an incentive to increase the number of registered users on the network. He noted that the standardized electronic lease carries the status of an enforceable instrument, and without this contract—which was developed and reviewed by specialists from the Ministries of Housing and Justice—the lease agreement loses its ”enforceable” status, making it difficult for the various parties to enforce, monitor, and protect their rights under the lease agreements.
Amendment of Commission Regulations
Al-Bati stated that the regulations for real estate offices approved by the Council of Ministers confirm that no real estate office may be opened without being registered in the Commercial Register, noting that the agency must be wholly owned by a Saudi national or a company wholly owned by Saudis, and that its managing director must be a Saudi national. He emphasized that Ejar Network adheres to the regulations, which prohibit the registration of non-Saudis.
Regarding the proposal by real estate agencies to increase the brokerage commission, which currently stands at 2.5%, Al-Bati noted that a study is underway to amend several aspects of real estate agency operations, including commission controls, the documentation of transactions and contracts by real estate agencies, restricting brokerage activities to real estate agencies, strengthening oversight of regulation enforcement, addressing violations, and enhancing on-site inspections. The results will be announced shortly.
Fines for Violators and Office Closures
Regarding the integration of the “Ijar” system with the Ministry of Interior’s “Shamos” system, Al-Bati noted that coordination is currently underway with the administrators of the Shamos system to achieve integration between the two systems so that registration in the Ijar network will be sufficient, noting that the coordination includes data exchange between the two systems. The program’s general supervisor also outlined the penalties that will be imposed on violators, which are tiered, in accordance with Article 7 of the Rental Offices Regulations and include: a fine not exceeding 25,000 riyals, closure of the office for a period not exceeding one year, and permanent revocation of the office’s license.
