Real Estate Financing Contracts Concluded Between Real Estate Financiers on Behalf or by Proxy of Others and Individual Customers Are Subject to Financing Regulations and Instructions Issued by the Organization

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

Saudi Central Bank
Office of the Deputy Governor for Supervision
Headquarters

No.: 42013215
Date: 1442/03/04
Attachments: None

Circular

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

Subject: Real estate financing contracts concluded between the real estate financier (on behalf or by proxy of others) and individual customers are subject to the financing regulations and instructions issued by the Organization.

Based on the authorities vested in the Organization under relevant regulations, bylaws, and instructions. And based on Article (Two) of the Real Estate Financing System, which stipulates that "the Organization is responsible for regulating the real estate financing sector, including: -5- Issuing standards and procedures related to real estate financing." And Paragraph (1) of Article (Nine) of the Executive Regulations of the Real Estate Financing System, which stipulates that "the real estate financier must comply with the requirements specified in this System and these Regulations, other relevant systems and bylaws, and the rules and instructions related to real estate financing issued by the Organization. All real estate financing contracts and products must also comply with this System, systems, regulations, rules, and relevant instructions."

The Organization wishes to confirm that real estate financiers must comply with the financing regulations, their executive bylaws, and the Organization's approved instructions in all individual real estate financing contracts concluded originally, by proxy, or on behalf of others. Furthermore, real estate financiers must not conclude any new contracts unless this is ensured, and must rectify their agreements with other parties in accordance with this directive. This includes contracts where the real estate financier acts as an agent for the funding entity, and also covers cases where the credit granting decision does not belong to the real estate financier. For your information and action accordingly.

Yours sincerely,
Fahd bin Ibrahim Al-Shathri
Deputy Governor for Supervision

Distribution Scope:

• Banks and investment companies operating in the Kingdom.
• Real estate financing companies operating in the Kingdom.

Al-Huda
P.O. Box 2992, Riyadh 11179, Tel: 6773200, Fax: 6772542