Legal liability in delayed delivery of off-plan sales projects
Dr. Abdulhakim bin Abdullah Al-Kharhi
The off-plan sale projects are one of the most prominent transformations in the Saudi real estate market in recent years, allowing developers to finance their projects through the beneficiaries themselves, and creating practical solutions to provide housing and accelerate urban development. However, this modern contractual formula has brought with it recurring legal challenges, most notably the delayed delivery of housing units from the agreed dates, and the consequent financial and moral damage to the buyers.
The issue here is not a simple one. <The issue here is not limited to a delay in implementation, but rather touches the essence of the contractual obligation of the real estate developer, who pledged to deliver a ready-made unit according to the specified specifications and on the announced date. The contract in off-plan sales projects is not only a promise of a future transfer of ownership, but a real commitment to a specific time and specifications, subject to strict regulatory oversight by the Ministry of Municipalities and Housing, as well as the financing and supervising authorities of the project.
The issue here is not limited to delays in implementation. <From the regulatory point of view, the Off-Map Sale Law and its executive regulations constitute the main frame of reference in this field, as it imposes a number of essential obligations on the real estate developer, most notably opening an escrow account for the project, not using the beneficiaries“ funds except to the extent of what has actually been completed, and submitting periodic reports on the progress of the work. These obligations are not a formality, but represent the real guarantee for the beneficiary and the market, and their breach is an accountable offense.
<As for the Civil Transactions Law, it has come to consolidate the general rules of implementation and fulfillment of obligations, as it emphasizes that ”whoever commits himself to something is obliged to fulfill it within the specified time, and if he delays without a legitimate excuse, he must compensate him." Thus, the delay in the delivery of the project becomes a contractual breach giving rise to civil liability, unless the developer proves a compelling reason that prevented implementation, such as general exceptional circumstances or force majeure beyond the control of the developer.
However, in practice, the developer has not been able to prove the existence of a compelling reason that prevented implementation, such as general exceptional circumstances or force majeure. <However, practice shows that many delays are not due to force majeure, but to poor financial or administrative planning, misuse of buyers' payments, or slow executive decision-making. In these cases, the buyer has the right to claim compensation for the actual damage, whether it is the additional cost of temporary housing, or the loss resulting from the interruption of the use of the property, and even for the moral damage resulting from the breach of trust and commitment according to the signed contract and the applicable regulations.
Here is where the role of the authorities comes into play. <The law assigns the Ministry of Municipalities and Housing the responsibility of supervising and monitoring licensed projects, but the effectiveness of monitoring depends on the accuracy of the periodic disclosure of developers and the speed of intervention when indicators of delays or financial irregularities appear. In some cases, the responsibility may intersect between the developer and the implementing contractor, and here the distinction between contractual and executive obligations becomes crucial when assessing liability before the judiciary.
From an economic point of view. <From an economic point of view, the delay in project delivery reflects negatively on consumer confidence in the real estate market and affects the flow of financing from banks and investors, in addition to its social cost of disrupting families' plans and postponing their housing stability. Therefore, legal liability is not only retroactive when the breach occurs, but should be based on a preventive system that ensures the developer's commitment from the planning stage until delivery.
The most important tools are to ensure the developer's commitment from the planning stage until delivery. <Among the most important prevention tools are publishing transparent reports on the completion rates of licensed projects, enabling buyers to follow the progress of implementation through reliable digital platforms, in addition to requiring developers to provide a specific time guarantee for project delivery, and establishing clear penalties for breach. Legal responsibility is not a punitive end, but rather a means to ensure balance and justice between the developer and the beneficiary, and to achieve the principle of trust in contracting.
In conclusion. <In conclusion, there is no doubt that the development of the off-plan sales sector is a key pillar in achieving the housing targets and Vision 2030, but its success is not measured by the number of projects, but by its ability to adhere to deadlines, fulfill rights, and establish a contractual culture based on clarity and discipline. Legal liability for delayed delivery is not just a legal provision, but a criterion for the credibility of the market and the sustainability of confidence in it.
@Dr_alkharji
Lawyer and legal advisor
