Register Mortgages in Accordance with the Fact of the Contract

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

Saudi Central Bank
Headquarters

General Directorate for the Supervision of Finance Companies

Ref. No.: ....................................
Date: 1438/08/26
Attachments: ....................................

No.: 381000089828

Circular

Dear ....................................,

Greetings,

Subject: Registering Real Estate Mortgages in Accordance with the True Nature of the Contract.

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

The Authority emphasizes that banks, commercial banks, and finance companies must comply with the following:
First: Documenting real estate mortgages in accordance with the true nature of the contract, and ceasing procedures related to transferring property ownership instead of mortgaging it. Second: Rectifying the status of properties currently registered in the name of the bank/commercial bank or finance company within a period not exceeding three (3) years, and informing customers accordingly. Third: Providing the Authority with cases that prove the refusal of notaries public to register real estate mortgages in favor of the bank/commercial bank or finance companies.

For your information and immediate action effective from the date hereof.
Yours sincerely,

Ahmed bin Abdullah Al Sheikh
Deputy Governor for Supervision

Distribution List:

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

P.O. Box: 2992, Riyadh: 11169, Tel: +966 11 4662020, Fax: +966 11 4662488