Saudi Mortgage Law| Legal Terms and Controls

Saudi Mortgage Law| Legal Terms and Controls

The Saudi mortgage system is the legal framework that regulates the mortgage contract as one of the most important guarantee tools in financial transactions, as it determines the correct conditions for its conclusion and its regulatory effects on its parties. 

The validity of a mortgage contract is not limited to a mere agreement, but rather requires the availability of specific pillars and conditions, documenting it in accordance with approved procedures, and precisely defining obligations to ensure the preservation of rights. 

Given the importance of this contract in practice, familiarity with its regulatory terms becomes essential to avoid disputes and ensure the integrity of procedures from the outset.

If you are looking for accurate legal advice in mortgage cases, you can contact a specialized real estate attorney from the office of Attorney Abdul Majeed Al Rashid for prompt and reliable legal support.

What is the new Saudi mortgage law?

It is a law that aims to enhance confidence in real estate transactions and protect the rights of both the debtor (mortgagee) and the creditor (mortgagee) in the mortgage contract.

Article 1 of the law defined a registered mortgage as a contract by which the mortgagee (creditor) acquires a right in kind over a specific property that has a record, and under which he has the authority to take precedence over all creditors in collecting his debt from the price of that property in whatever hand it is.

What are the terms of a mortgage contract?

Articles 2 and 4 of the system stipulate the conditions that must be met in the mortgaged property, which are:

• The mortgagor must be the owner of the mortgaged property and qualified to dispose of it.
• The mortgagor may be the debtor himself or a guarantor in kind who provides a property that he mortgages for the benefit of the debtor, even without his permission.
• The mortgaged property must exist or be likely to exist and may be sold.
• The mortgaged property must be known in a way that negates ignorance and stated in the mortgage contract.

Invalid terms in a mortgage contract 

The conditions contained in Article 19 of the system are invalid and cannot be included in the mortgage contract. They are:

• The benefits of the mortgaged property must be for the mortgagee and he has the right to collect the yield of the mortgaged property, provided that he does not benefit from it, with the approval of the mortgagor.
• The mortgagee must own the mortgaged property in exchange for his debt if the mortgagor does not pay it for its specified term.

Is the mortgaged property registered in the real estate registry?

Is the mortgaged property registered in the real estate registry?

The mortgaged property is registered in the real estate registry if the conditions contained in the real property registration system apply to it, and the property is subject to the registration procedures contained therein.

However, if the mortgaged property is not registered in the real estate registry and the provisions of the real estate registration system do not apply to it, the mortgage on the property shall be registered by indicating its record with the court or the competent notary public, in accordance with what is stipulated in Article One of the registered real estate mortgage system.

What is the difference between a mortgage and a mortgage?

A mortgage loan is financial financing provided by a bank or other financing entity to a client so that he can purchase a property or build a new property on land he owns.

While a mortgage is a security where the property owned by the mortgagor is mortgaged due to a debt owed by him to the mortgagee (creditor).

Is it permissible to sell the mortgaged property?

The mortgaged property may not be sold except with the consent of the mortgagee, if the property is not registered in accordance with the provisions of the real property registration system.

If the property is registered, the mortgagor may dispose of it and sell it in accordance with the text of Article 11 of the system.

How do I unpack a mortgage?

How do I unpack a mortgage?

Article 37 of the Registered Mortgage Law clarifies that the mortgage is considered a subsidiary of the debt, so the mortgage is terminated upon the expiration of all the documented debt. If the debt has expired and then returned for any reason, the mortgage is returned upon the return of the debt.

What are mortgage expiration cases?

• Forced sale of mortgaged property and payment of its price to mortgaged creditors.
• Transfer of ownership of the mortgaged property to the mortgagee.
• The mortgagee waives the mortgage by documented waiver.
• Destruction of the mortgaged property.
• The mortgage is not invalidated by the death of the mortgagor or mortgagee, so if one of them dies, his heirs take his place.

Real estate lawyer from the office of lawyer Abdul Majeed Al Rashid

The importance of seeking the assistance of a skilled real estate lawyer from the office of Attorney Abdul Majeed Al Rashid is highlighted to ensure the integrity of the procedures and an understanding of the legal obligations associated with the mortgage contract. 

Having a specialized lawyer helps you avoid legal errors, protect your rights, and complete your real estate transactions with greater confidence and clarity.

“Get reliable legal support and contact a competent real estate attorney with ease”