Update of Rule No. (300-1-3-6) of the Account Opening Rules
No: 000046028059 Date(g): 9/11/2024 | Date(h): 8/5/1446 Status: In-Force Translated Document
In Reference to Rule No. (300-1-3-6) on Escrow Account for Real Estate Development–off-Plan Unit Sale and Rental Project, included in the Account Opening Rules, notified pursuant to SAMA Circular No. (67/65681) dated 01/11/1440 H, and a reference to the Law of Sale and Leasing of Real Estate Projects on Plan issued by Royal Decree No. (M/44) dated 1/03/1445 H and its Implementing Regulations, and to the Law of Collective Real Estate Investment Schemes issued by Royal Decree No. (M/203) dated 28/12/1444 H and its Implementing Regulations, and the instructions issued with the same Relationship, and in line with the alignment of organizational developments.
We inform you that the following has been decided:
First/ Amending the above-mentioned rule to be in accordance with the accompanying formula as follows:
- Amending the requirements for opening and managing escrow accounts for off-plan real estate projects.
- Adding a new paragraph regulating the opening and managing the bank accounts for escrow accounts for real estate contribution projects.
Second/ Amending the term and definition of "Escrow Account for Real Estate Development - Off-Plan Real Estate Units Sale Project Project" and adding the definition of the Escrow Account of the Real Estate Contribution Project within Chapter (1) on definitions, as follows:
- "Escrow accounts for off-plan sale or rental real estate projects": A bank account for depositing the amounts paid by financiers, buyers or tenants for the project.
- "Escrow Accounts for Real Estate Contributions Project": A bank account for depositing real estate contribution funds.
- Amending the requirements for opening and managing escrow accounts for off-plan real estate projects.
The New Rule under Rule No. (300-1-3-6) regarding the Requirements for Opening and Managing Bank Accounts for Escrow Accounts for Real Estate Development Projects
- 300-1-3-6 / Rules for Opening Escrow Accounts for Real Estate Development Projects:
The bank may open escrow accounts for real estate projects (sale or rental of off-plan real estate projects or real estate contributions) after fulfilling the following documents and procedures:
1. Verifying and identifying of the real estate developer, consulting office/engineering consultant, and certified public accountant in the legal form for each of them.
2. A written undertaking shall be made by the real estate developer stating that no disbursement shall be made from the account for purposes other than those concerning the project determined or its returns in the escrow account.
3. A written undertaking shall be made by the real estate developer stating its consent to amend the escrow account agreement to comply with any relevant laws, regulations, or instructions.
- Controls related to Opening and Managing Escrow Accounts for Off-Plan Sale or Rental Real Estate Projects:
1. Only one account shall be opened for each individual project and shall be named as follows: "name of project" Project- Escrow Account for "name of real estate developer”. Sub-accounts linked to the main account of the project may be opened, such as administrative and marketing expenses account, savings account, construction cost account, incentives account and finance account.
2. Payment shall be made from the project's escrow account based on the payment document submitted by the real estate developer to the bank. Such documents shall be certified by the consulting office and the certified public accountant and shall include the required amounts and justifications for their expenditure. Payment documents may be processed through secure technological means.
3. By exception to the provision in paragraph (2) above, payment may be made from the escrow account upon request from the Real Estate General Authority. The bank shall be notified through the Saudi Central Bank.
4. Payment from the account shall be made by check or transfers only and shall be within the limits stated in Paragraphs (2) and (3) above.
5. Deposits in the account shall be made by buyers, tenants, or financiers via any means of payment accepted by the bank other than cash.
Controls for Opening and Managing Escrow Accounts for Real Estate Contribution Projects
1. Only one account shall be opened for each individual project and shall be named as follows: "name of project" Project- Escrow Account for "Real Estate Contribution”. Sub-accounts linked to the main account of the contribution may be opened, such as: reserve account, revenue account, and any other sub-accounts for the purpose of the contribution project, such as a finance account.
2. Payment shall be made from the project's escrow account based on the payment document submitted by the real estate developer to the bank. Such documents shall be certified by the engineering consultant and the certified public accountant and shall include the required amounts and justifications for their expenditure. Payment documents may be processed through secure technological means.
3. Payment from the account shall be made by check or transfers only and shall be within the limits stated in Paragraph (2) above.
4. Payment shall be made from the reserve account based on the payment document submitted by the real estate developer to the bank. Such documents shall be certified by the engineering consultant and the certified public accountant and shall include the required amounts and justifications for their expenditure, along with the approval from the shareholders' association.
5. Payment shall be made from the revenue account based on the disbursement document submitted by the real estate developer, which must be recorded on the shareholders' register and certified by the certified public accountant. The document must include the required amounts and be accompanied by the completion certificate from the consultant or proof of the liquidation of the real estate contribution.
6. Deposits into the main and sub-accounts shall be made by the relevant financial market institution for issuing contribution certificates, financiers, or buyers, or from proceeds of the liquidation of the real estate contribution, by any accepted method, and cash deposits are not permitted.
General Provisions
1. The bank shall not activate the escrow account for the real estate project unless the license issued by the “Authority” to engage in the off-plan sale or rental of real estate projects or to offer the real estate contribution is submitted.
2. Project’s sub-accounts shall be used only for receiving/making deposits and transfers from and (in)to the main account.
3. No funds may be transferred from the escrow account to any other accounts other than that of its sub-accounts whose purposes are specified.
4. Checkbooks may be issued for this account at the request of the real estate developer. However, ATM cards and/or credit cards shall not be issued for this account.
5. The bank shall not attach the account for its own interest or that of the creditors of the real estate developer.
6. The bank shall not close the escrow account for the project except after obtaining approval from the relevant authority, without prejudice to the provisions of SAMA's instructions and the agreements in place.