Real Estate Contributions Law

Purpose and scope

• Regulates real-estate contributions, raises transparency and disclosure and protects the rights of all parties (Article 2); the Real Estate General Authority regulates the activity (Article 3).

Key rules, rights and obligations

• A contribution may not be offered, advertised, marketed or funded until the Capital Market Authority approves and the Authority licenses it, and the property must be owned under a valid, verified deed and have development approvals (Article 4).
• The licensee must be qualified and classified (Article 5), keep at least the share set by the regulation until the contribution ends (Article 12), and may not take decisions with an actual or potential conflict of interest (Article 21).
• A reserve of up to 15% of the estimated cost may be required for unforeseen expenses (Article 7), and lending from the contribution's capital is prohibited (Article 10).
• All proceeds go directly into the escrow account (Article 30), and assets may be sold only after valuation by accredited valuers, otherwise the sale is void (Article 27).

Violations, penalties and common problems

• Administrative sanctions: a warning, suspension of the licence for up to one year, cancellation, or a fine of up to ten million riyals (Article 32).
• Offering without a licence, conflicts of interest, selling assets without valuation, or not paying proceeds into escrow: up to three years in prison, with referral to the Public Prosecution (Article 35).

Procedures and key deadlines

• The first general meeting is valid only with two-thirds of the capital present (Article 25), and meetings and votes may be held electronically (Article 26).
• A committee hears violations (Article 33), and its decision may be challenged before the administrative court within sixty days of notice (Article 34).
• Before contributing, check the contribution's licence and escrow account on official platforms.

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.