Riyadh – Mohammed Jamos: Mandated Off-Plan Sales and Leasing System A real estate developer wishing to sell or lease off-plan real estate projects —after registering their name in the Developers Registry—to submit an application to the competent authority to obtain a special license for the real estate project, undertaking to commence construction work on the project within 6 months of obtaining the license.

Payment of Amounts

The provisions of the provisions of the regulation apply to the activity of selling and leasing off-plan real estate projects, where payments are received from buyers, tenants, or financiers of the real estate project, and the sale and lease of off-plan real estate projects owned by government entities in accordance with their nature and within the limits set forth in the regulations.

Buyer Compensation

The developer is obligated to complete the real estate project by the specified completion date. In the event of a delay in the delivery of the land or real estate unit for reasons beyond the developer’s control, the buyer is entitled to financial compensation determined in advance if it is developed land, or rent if it is a residential unit.

Review of the Application

The competent authority shall decide on the application within (thirty) days from the date of completion of the required documents; if that period expires without a decision, the application shall be deemed approved. In the event the competent authority rejects the application, the decision must be substantiated.

Prohibitions for Real Estate Developers

Engaging in the activity is prohibited unless the developer is registered in the developers" registry.

They are not permitted to advertise in local or foreign media.

They are not permitted to hold exhibitions for such projects or invite the public to them.

Unless the real estate project is licensed by the competent authority in accordance with the provisions of the law and regulations.

Requirements for Engaging in the Activity

Project license accompanied by the following:

• A copy of the commercial register.
• Chamber of Commerce membership.
• Credit report.
• Building permit.
• Title deed.
• A copy of the agreement concluded between the developer and the landowner or the beneficial owner, in accordance with the provisions of the law and regulations.
• A copy of the agreement concluded between the master developer and the sub-developer—if any—in accordance with the provisions of the law and regulations.
• Approved architectural designs and engineering plans.
• A copy of the contract concluded between him and the consulting firm.
• A copy of the contract concluded between him and the certified public accountant.
• An approved economic feasibility study for the real estate project.
• A commitment to commence construction work on the real estate project within (six) months from the date of obtaining the license.
• A sample sales contract between the applicant and the buyer, specifying the delivery dates of the property down to the day.
• An agreement to open an escrow account between him and a licensed bank in the Kingdom.

Duties of the Competent Authority:

• Supervising real estate projects, including issuing the necessary licenses, monitoring their implementation, and conducting oversight and inspections. The competent authority may delegate some of these tasks to the private sector, in accordance with the provisions of the Law and the Regulations.
• Preparing a public database of real estate projects licensed in accordance with the law. The regulations specify the data that must be included in the database.
• Preparing a special register called the "Developer Registry." The regulations shall specify the rules and procedures for registration.
• Upon issuance of the special license for the real estate project, the competent authority shall:
• Request an endorsement on the title deed of the property to be developed.

Terms and Definitions in the Regulation

Real Estate Project:

A real estate project intended for development to sell or lease developed land or off-plan real estate units, prior to commencement of implementation or during construction and development work.

Escrow Account:

A bank account specific to the real estate project, into which funds paid by the project’s financiers, buyers, or tenants are deposited.

Real Estate Development:

The construction of residential, commercial, office, service, industrial, tourism, or other real estate projects.

Register of Developers:

A registry containing the names of developers qualified to develop, sell, and lease real estate projects, licensed by the competent authority to engage in real estate development activities in the Kingdom.

Highlights of the Off-Plan Sales and Leasing System