Chapter Two Real Estate Finance Contract
Article 8
1. A real estate finance entity shall comply with the requirements stipulated in the Law, this Regulation, other related laws and regulations as well as rules and instructions issued by SAMA relating to real estate finance. Real estate finance contracts and products shall comply with the Law and relevant laws, regulations, rules and instructions.
2. SAMA may draft standard real estate finance contracts and real estate finance entities shall comply with such standard contracts unless otherwise provided for.
3. The real estate finance entity shall obtain a no objection letter from SAMA for its real estate finance products before offering such products.
Article 9
Subject to the provisions of the Implementing Regulation of Finance Companies Control Law, a written or electronic contract shall be drafted between the real estate finance entity and the borrower, and shall include, at least, the following:
1. Names of the parties of the real estate finance contract, number of national identity or Iqama (residence permit) of the borrower, their official addresses and contact information including mobile number and electronic mail address, if available;
2. Real estate broker, if any;
3. Term of real estate finance contract;
4. Total amount of real estate finance;
5. Term cost, conditions governing its application, any index or reference rate applicable to the initially agreed upon term cost, as well as duration, conditions and procedures for changing the term cost;
6. Annual percentage rate, calculated in accordance with the provisions of the Implementing Regulation of the Finance Companies Control Law;
7. Total amount payable by the borrower calculated at the time of concluding the real estate finance contract; stating the assumptions used to calculate such amount;
8. Amount of installments payable by the borrower, number and due dates of installments, and manner of distribution of the remaining amount if the term cost is fixed. In case of variable term cost, three examples of installment amount shall be set, taking into account the initial term cost as well as higher and lower term cost;
9. Due dates for payment of fees or amounts other than the finance amount and conditions for such payment;
10. Implications of late payments;
11. Attestation fees, if applicable;
12. Collateral and necessary insurance;
13. Procedures for exercising the right of withdrawal, its conditions and the financial obligations resulting therefrom;
14. Procedures of early repayment, and procedures for compensating the real estate finance entity, if applicable, and manner of determining such compensation;
15. Procedure for exercising the right to terminate the real estate finance contract;
16. Data of the dwelling subject of the real estate finance contract, including the city, district, street, number, type, total land area, constructed area, number of rooms, date of construction and number of title deed;
17. The real estate finance entity's acknowledgement of its verification of the validity of the real estate ownership and the absence of any encumbrances as well as stating its condition;
18. The borrower's acknowledgement of his inspection and acceptance of the real estate, without affecting the responsibility of the real estate finance entity for the verification of the real estate integrity;
19. Bank name and account number for depositing real estate finance installments;
20. Warranty period provided by the real estate developer or contractor of the building and the names of the design consultant and construction consultant as well as their license numbers;
21. Registration number and date of owners association as well as place of registration for a portioned real estate;
22. Time and manner of inspection conducted by the real estate finance entity for the verification of the real estate integrity at least once every three years;
23. The borrower's consent to include the borrower’s information in the credit record;
24. In variable term cost real estate finance contracts, a description of the formula that determines the rate shall be included in a way that enables the consumer to understand the term cost and distribution of the cost over the repayment period; and
25. Any other information or data stipulated by SAMA.
Article 10
The real estate finance contract preamble shall include a summary covering the basic information of the finance product and the main provisions of the finance contract in a language clear to the borrower, in accordance with the form stipulated by SAMA. The borrower's receipt of such summary shall be documented in the finance file.
Article 11
The real estate finance entity shall not extend credit on any form of finance exceeding 70 percent of the value of the dwelling subject of the real estate finance contract. SAMA may change such percentage according to prevailing market conditions.
Article 12
The real estate finance entity shall verify the validity of the dwelling title deed subject of the real estate finance contract to ensure the absence of any in rem rights affecting the rights of the real estate finance entity and include an attestation by the competent authority to this effect in the finance file.
Article 13
1. Upon obtaining the consumer’s consent, the real estate finance entity shall review the consumer’s credit record to verify the consumer’s solvency, ability to repay and credit behaviour, and document such verification in the finance file.
2. Upon obtaining borrower's consent, the real estate finance entity shall record the borrower's credit information with one or more companies licensed to collect credit information, pursuant to the provisions of Article 15 of this Regulation and other applicable laws. Such information shall be updated throughout the duration of the relationship with the borrower.
3. The real estate finance entity shall reject the finance application in the absence of the consents specified in paragraphs 1 and 2 of this Article.
Article 14
Without prejudice to applicable laws, the credit record of the borrower shall include his personal information including his name, national identification number, place of residence, occupation, marital status, academic qualifications, monthly income, number of dependents and any other information stipulated by SAMA.
Article 15
The real finance contract shall stipulate the right of the real estate finance entity to transfer its rights to third parties on the secondary market without the consent of the borrower, including the right of mortgage and other guarantees.