Real Estate Brokerage Law

Purpose and scope

• Regulates real estate brokerage and real estate services such as marketing, property management and auctions, and applies to anyone carrying them on in the Kingdom (Articles 2 and 3).
• The Real Estate General Authority licenses, supervises and prepares mandatory and model contracts (Article 5); the law repealed the former regulation of real estate offices (Article 22).

Key rules, rights and obligations

• No one may carry on brokerage or provide real estate services without a licence from the Authority (Article 4).
• A brokerage contract must be in writing and deposited with the Authority, and cannot be relied on otherwise; it must have a set term, failing which it lasts ninety days from signing (Article 7).
• The broker must act personally or through licensed staff, not harm clients' interests, keep deals confidential, verify and disclose property information without misleading anyone, and show his name and licence number in every advertisement (Article 10).
• Commission is 2.5% of the price in a sale and of the first year's rent only in a lease, unless agreed otherwise in writing; it is paid by the party who contracted with the broker, and the total may not exceed this rate if the broker acts for more than one party (Article 14).
• The broker earns commission if the deal is completed during the contract or within two months after it ends where he proves his role, or if the deal fails and the seller or landlord keeps the deposit (Article 15).
• The broker may receive money from the parties only as needed for his work and use it only for its purpose (Article 16); a tenant's security deposit is handed to the Authority or its delegate until the property is returned (Article 12).

Violations, penalties and common problems

• Breach of the law: a warning, suspension of the licence for up to one year, cancellation, or a fine of up to SAR 200,000, or more than one, and the fine may be doubled for a repeat within three years (Article 19).
• A person whose licence is cancelled may reapply only after three years (Article 19).
• Common problems: oral agreements with the broker, dealing with unlicensed brokers, disputes over commission after the contract ends, and property ads without a licence number.
• Where the act is also an offence under another law, the heavier penalty applies (Article 21).

Procedures and key deadlines

• Violations are heard by a committee formed by the Authority; a penalty may be challenged before the competent judicial body within thirty days of notification (Article 20).
• Check the broker's licence on the Real Estate General Authority platforms, and sign the electronic brokerage contract stating its term and the commission.

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.