Procedural Requirements for Mortgage Registration

In the Name of Allah, the Most Gracious, the Most Merciful

Saudi Central Bank Headquarters General Directorate for Supervision of Finance Companies Ref. No.:
Attachments:

Circular

Subject: Procedural Requirements for Mortgage Registration

To Whom It May Concern, Peace, mercy, and blessings of Allah be upon you,

Based on the powers granted to the Bank under the Saudi Central Bank System issued by Royal Decree No. (23) dated 23/5/1377H, the Banking Control System issued by Royal Decree No. (5/M) dated 22/2/1386H, the Finance Companies Control System issued by Royal Decree No. (51/M) dated 13/8/1433H, and in reference to the Registered Mortgage System issued by Royal Decree No. (49/M) dated 13/8/1433H.

In light of discrepancies noted by the Bank regarding the procedures of financing entities compared to notary public offices, and to continue cooperation between the Ministry of Justice and the Bank, the Ministry of Justice has issued a procedural guide aimed at unifying mortgage procedures between financing entities and notary offices. The Ministry has also issued forms for mortgage registration and a form for recording an incident.

Accordingly, the Bank emphasizes that banks, commercial banks, and finance companies must adhere to the following:

First: To work in accordance with and comply with the procedural requirements for notarizing and registering mortgages according to the registration forms (Attachment 1).

Second: To provide the Bank with cases proving a notary public's refusal to proceed, according to the incident recording form (Attachment 2).

To respond and act accordingly effective from its date.

Yours sincerely,

Ahmed bin Abdullah Al Sheikh
Deputy Governor for Supervision

Distribution Scope:

• Banks and commercial banks operating in the Kingdom.
• Finance companies operating in the Kingdom.
• Supervision Agency Departments.

P.O. Box 2992, Riyadh 11169, Tel: 4662020, Fax: 4662488

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Procedural Requirements for Mortgage Notarization
and the Prepared Forms

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• Procedural Requirements for Mortgage Notarization and the Prepared Forms:

First: The mortgagor's presence or their representative holding a power of attorney authorizing the required procedure.

Second: The presence of the financier's representative (the bank or finance company) holding a power of attorney authorizing the required procedure.

Third: The financier must be a licensed bank or finance company, and the financier must hold a valid license from the Saudi Central Bank to conduct mortgage financing.

Fourth: The mortgaged property must be owned by the mortgagor, and it is permissible for the mortgaged property to belong to a real guarantor who offers their property as a mortgage on behalf of the debtor, even without the debtor's consent.

Fifth: The mortgaged property must be specified, existing or partially existing, and legally sellable.

Sixth: The financier must provide documentation proving that the contract executed between them and the mortgagor does not conflict with Islamic Sharia rulings, based on a letter from the Sharia Board approving the product, rather than approving each contract individually.

Seventh: The completion of vacancy and mortgage registration must be done in a single procedure, in accordance with Ministry of Justice Instruction No. 13/T/6973 dated 19/1/1439H, for the purpose of correcting previous mortgage registrations.

Eighth: All work must be conducted according to the forms prepared by the Saudi Central Bank and the Ministry of Justice.

And Allah grants success...

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Form 1 (Property Owned by the Finance Company)

Reverend Head of Notary Office, may Allah protect you,

Peace, mercy, and blessings of Allah be upon you, and thereafter:

We inform your Reverence that the Bank/Commercial Bank/Company: ...................... holding Commercial Registration No. ...................... dated / / 14 / H owns the property pursuant to the title deed issued by your department No. ...................... dated / / 14 / H, and wishes to approve the vacancy of the aforementioned property to Mr./Ms. ...................... Saudi male/female nationality holding National ID No. ......................, on the condition that the aforementioned property be mortgaged in favor of the finance company/bank/commercial bank as security for the settlement of financial dues amounting to ...................... SAR (amount in words) pursuant to the (financing type) contract No. ...................... dated / / 14 / H approved by the Sharia Board of the finance company/bank/commercial bank No. ...................... dated / / 14 / H, noting that the Sharia Board's approval is valid and has not been superseded or revoked, and that the execution of this specific debt contract with the client has been or will be carried out in accordance with the Sharia Board's decisions without contradiction, with the debt to be repaid in monthly installments totaling ........... installments, each installment valued at ...................... SAR (amount in words) payable on the ........... day of each Hijri/Gregorian month effective from the date / / 14 / H, and in case of non-payment, the property will be sold according to the Execution System.

Therefore, we kindly request your Reverence to notarize the mortgage. May Allah protect and guard you.

Representative of the Finance Company/Bank/Commercial Bank

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Form 2 (Property Owned by the Mortgaging Client)

Reverend Head of Notary Office, may Allah protect you,

Peace, mercy, and blessings of Allah be upon you, and thereafter:

We inform your Reverence that the Citizen / Female Citizen / Institution / Company ...................... holding Registration No. ...................... dated (..............) 14 / H owns Property No. ( ) pursuant to the title deed issued by your department No. (..............) dated (..............) 14 / H, and since the aforementioned is liable for dues to the finance company/bank/commercial bank amounting to ...................... SAR (installment) pursuant to the contract (SAR ......................) No. ( ) dated ( ) 14 / H approved by the Sharia Board No. ( ) dated ( ) 14 / H, noting that the Sharia Board's approval is valid and has not been superseded or revoked, and that the execution of this specific debt contract with the client has been or will be carried out in accordance with the Sharia Board's decisions without contradiction, with the debt to be repaid in monthly installments totaling ( ) installments, each installment valued at ( ) SAR ( ) payable on the ( ) day of each Hijri/Gregorian month effective from the date / / 14 / H, the aforementioned has mortgaged the aforementioned described property as security for the settlement of that debt, in accordance with the conditions stipulated in the mortgage contract, and in case of non-payment, the property will be sold according to the Execution System.

Therefore, we kindly request your Reverence to notarize the mortgage. May Allah protect and guard you.

Representative of the Finance Company/Bank/Commercial Bank

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Form 3 (Property Owned by a Third Party, Sold to the Company, Then Resold to the Client and Mortgaged)

Form for Recording Property Sale and Mortgage (Review)

Reverend Head of Notary Office, may Allah protect you,

We inform your Reverence that the Citizen / Female Citizen / Institution / Company: ...................... holding Registration No. ...................... owns the property pursuant to the title deed issued by your department No. ...................... dated / / 14 / H, and since the aforementioned wishes to sell the aforementioned described property to the finance company/bank/commercial bank holding Commercial Registration No. ...................... dated / / 14 / H for a price of ...................... SAR (amount in words), and the finance company/bank/commercial bank has accepted this sale, then resold it pursuant to a review contract No. ...................... dated / / 14 / H valued at ...................... SAR (amount in words) to Mr./Ms. ...................... Saudi male/female nationality holding National ID No. ......................, and has accepted this sale on the condition that the aforementioned property be mortgaged in favor of the finance company/bank/commercial bank as security for the settlement of financial dues to the finance company/bank/commercial bank amounting to ...................... SAR (amount in words) pursuant to the review contract No. ...................... dated / / 14 / H approved by the Sharia Board No. ...................... dated / / 14 / H, noting that the Sharia Board's approval is valid and has not been superseded or revoked, and that the execution of this specific debt contract with the client has been or will be carried out in accordance with the Sharia Board's decisions without contradiction, with the debt to be repaid in monthly installments totaling ........... installments, each installment valued at ...................... SAR (amount in words) payable on the ........... day of each Hijri/Gregorian month effective from the date / / 14 / H, and in case of non-payment, the property will be sold according to the Execution System.

Therefore, we kindly request your Reverence to notarize the sale and mortgage. May Allah protect and guard you.

Representative of the Finance Company/Bank/Commercial Bank

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Incident Recording Form

With reference to the Saudi Central Bank Circular No. 381000089828 dated 28/08/1438H instructing commercial banks/banks and finance companies to notarize mortgages in accordance with the true nature of the contract, to cease procedures related to transferring property ownership as a proxy for its mortgage, and to rectify the status of properties currently registered under the bank's name within a period not exceeding 3 years and to inform clients accordingly.

We inform you that we were unable to execute the mortgage due to the following incident:

Notary Office Location
Notary Public Name
Transaction Registration Number at Notary Office and Date
Title Deed Number and Date
Financing Type
Financier (Bank or Finance Company)

• The Saudi Central Bank has reviewed the aforementioned request and determined that it does not violate systems and regulations related to the Bank. • A copy of the letter addressed to the notary office is attached with the form.

Representative of the Saudi Central Bank