The Official Gazette “Umm Al-Qura” published, in its issue issued on Friday, the controls of the escrow account for real estate contributions, issued by the decision of the Board of Directors of the General Real Estate Authority No. (Q/M/S/E/2/2024/T) dated 07/18/1445 AH.
According to the Umm Al-Qura newspaper, the text of the articles of the regulations are as follows:
According to the Umm Al-Qura newspaper, the text of the articles of the regulations are as follows:
First Article:
For the purpose of applying these regulations, the following words and phrases, wherever used, shall have the meanings indicated in front of each of them, unless the context requires otherwise:
Authority: Public Authority for Real Estate.
Real Estate Contribution: A real estate development project in which a group of people participate in order to achieve a benefit, by owning a property and developing it into residential, commercial, industrial, agricultural, etc. and then selling and terminating the contribution, not including real estate investment funds.
Licensee: The licensed real estate developer.
Escrow Account: The bank account for the real estate contribution.
Shareholders' Register: A register in which the names of the shareholders, their shares and any change in the ownership of their shares are recorded.
License: The real estate contribution license issued by the Authority.
Custodian: The banking institution licensed by the competent authority.
Chartered Accountant: A person licensed by the Saudi Commission for Auditors and Accountants to practice the accounting and auditing profession.
Engineering Consultant: The engineering supervision office licensed by the Saudi Board of Engineers for engineering consultancy work.
Article Two:
These regulations aim to organize the escrow account in real estate contribution projects, and these regulations apply to the escrow account taking into account the provisions of the Real Estate Contributions Law and its Executive Regulations, the instructions of the Saudi Central Bank and the relevant regulations and instructions.
Article Three:
1- The escrow account (in Saudi Riyals) shall be opened in the name of the real estate contribution at the request of the licensee after obtaining the license.
2- One main escrow account shall be established in the name of the real estate contribution under a written agreement between the licensee and the custodian of the account; to deposit and manage the funds of the real estate contribution.
3- Sub-accounts linked to the main account of the real estate contribution shall be opened as follows:
a- Reserve account for the purposes of meeting any unforeseen expenses of the real estate contribution in accordance with the provisions stipulated in the Real Estate Contributions Law and its Executive Regulations.
b- Revenue account for the purpose of depositing the proceeds from the sale or liquidation of the contribution's assets.
c. Any other sub-accounts for the purpose of the project, e.g: Financing account.
4- The agreement to open the escrow account between the licensee and the custodian must ensure that the licensee commits to disburse from the account only for the purposes of the specific real estate contribution only, and the conditions and procedures for disbursement from the escrow account in accordance with these regulations and the agreements or contracts signed between the licensee and each of the custodian, engineering consultant and legal accountant.
5- A written undertaking from the licensee to agree to amend the agreement signed between him and the Account Custodian in the event that any relevant laws, regulations or decisions are issued or amended.
Article Four:
The main escrow account and sub-accounts shall be managed in accordance with the following controls:
1- Disbursement from the main account is made according to the payment document submitted by the licensee to the account custodian, provided that it is certified by the engineering consultant and the legal accountant and includes the amounts and justifications for disbursement, and it is allowed to approve the disbursement documents through secure technical means.
2- Disbursement from the reserve account shall be made according to the payment document submitted by the licensee to the account custodian, provided that it is certified by the engineering consultant and the legal accountant, including the amounts and justifications for disbursement, accompanied by the approval of the shareholders' association.
3- Disbursement from the revenue account shall be made according to the payment document submitted by the licensee to the account secretary, provided that the document is based on the shareholders' register, certified by the legal accountant, including the required amounts, and attached to the completion certificate from the engineering consultant or evidence of liquidation of the real estate contribution.
4- Deposits to the main and sub-account from the capital market institution designated to offer the share certificates, financiers, purchasers or resulting from the liquidation of the real estate contribution shall be by any means of payment accepted by the custodian of the account except cash.
5- Disbursement from the escrow account is limited through checks or money orders only.
Article V:
1- The custodian is not allowed to seize the escrow account in its favor or in favor of the developer's creditors, unless there is a court order on the real estate contribution.
2- It is not allowed to transfer any amounts of money from the escrow account to any other accounts, except for the sub-accounts of the escrow account for which the purpose is specified.
3- If the licensee obtains financing for the benefit of the real estate contribution, the financing amount must be deposited in the escrow account.
4- It is not allowed to issue ATM cards or credit cards on the escrow account.
5- It is not allowed to use the funds in the account in any investment or speculative operations of any kind.
Article Six:
Subject to the instructions of the Central Bank of Saudi Arabia, the escrow account shall not be closed by the licensee after the expiration of the real estate contribution and the return of funds to the beneficiaries only after the approval of the General Authority for Real Estate.
Article Seven:
The regulations shall be published and enforced from the date of publication in the Official Gazette.
