This content is from: Local Insights

Saudi Arabia

Saudi Arabia has set up a new regulatory regime for registering interests in real property and related transactions. The Law for Registration of Real Property (the Law) was published on May 18 2002 and became effective one year later. Currently, interests in real property and related transactions (for example, transfers of ownership, mortgages, the creation of Waqfs (similar to the Western concept of trusts) with respect to real property and bequeathing real property through wills) are registered with notaries in special registers maintained for this purpose. Under the Law, new real property registers (the Registers) will be set up jointly by the Ministry of Municipalities and Rural Affairs and the Ministry of Justice. The Registers will be maintained and administrated the Department of Real Property Registration, a department of the Ministry of Justice. The Law requires all real property interests and transactions to be recorded in the Register, failing which no real property interest or transaction will have legal effect as to third parties. The Law further provides that lease agreements with terms exceeding five years will not be effective as to third parties for the period exceeding the first five years of the lease term unless they are recorded in the Registers.

The Implementing Regulations of the Law were published in the Official Gazette on October 15 2004, although the new regulatory regime has yet to be implemented. The Minister of Justice, coordinating with the Minister of Municipalities and Rural Affairs, will from time to time issue decisions specifying the geographical areas and regions in which the new regime will be implemented. A separate Register will be established for each geographical area specified in the Minister's decisions. Until a geographical area is included in a decision of the Minister of Justice, registration of interests and transactions with respect to properties in that area will continue to be processed by notaries. The Law mandates that the Ministry of Justice designate a judge to adjudicate complaints, objections and contested interests arising from the transfer to the new registration system.

The Implementing Regulations provide a detailed procedural framework in relation to the new regulatory regime, with responsibilities distributed between the Ministry of Justice and the Ministry of Municipalities and Rural Affairs. The Ministry of Municipalities and Rural Affairs is responsible for the technical and mechanical aspects of the process, which include undertaking surveys and statistical duties and preparing maps and plans for real property units. The responsibilities of the Ministry of Justice include supporting and supervising the technical and procedural processes during the transitional stage, safekeeping the real property registers and all related documents, recording interests and transactions in the real property registers, issuing title deeds and, upon a request by interested parties, rendering certificates describing the legal status of a registered unit of real property (the certificates will state the unit number of the property and certain other requested information but will not include the name of the owner of the property or the owner's address).

Combined, the Law and the Implementing Regulations, when fully implemented, should produce a more transparent, integrated, systematic and streamlined framework for the registration of interests and transactions with respect to real property in the Kingdom of Saudi Arabia.

Tariq A Abbadi and Aaron K Adkins

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