Regulations and Procedures for Requesting and Issuing Extracts of the Executive Document for Registered Finance Lease Contracts
No: 42039135 Date(g): 25/1/2021 | Date(h): 12/6/1442 Status: In-Force Translated Document
Based on the powers vested to SAMA under the Finance Lease Law issued by Royal Decree No. (M/48) dated 13/8/1433 H, and in accordance with Paragraph (2) of Article Twenty-Five of the Implementing Regulation of the Finance Lease Law issued by the decision of His Excellency the Governor No. (1/M Sh T) dated 14/4/1434 H, and amended by the decision of His Excellency the Governor No. (93/M Sh T) dated 18/10/1441 H, which stipulates "After obtaining an extract of the enforcement instrument for the registered financing lease contract as an enforcement instrument, in accordance with Paragraph Eight of Article Nine of the Enforcement Law, and indicating compliance", and as a result of the fruitful cooperation between SAMA and the Ministry of Justice in all matters serving the public interest, including those related to financing lease contracts, and in the interest of organizing the procedures for requesting and issuing extracts of the enforcement instrument for the registered leasing financing contract issued by licensed financing lease contract registration companies authorized by SAMA.
You will find a copy of the regulations and procedures for requesting and issuing extracts of the enforcement instrument for the registered leasing financing contract. SAMA emphasizes that lessors and leasing financing contract registration companies must fully comply with these regulations and procedures, in addition to the applicable laws, regulations, and instructions issued by the relevant authorities, Lessors and contract registration companies will not be exempted from liability in case of non-compliance. Please note that these regulations supersede the regulations for the recovery of movable assets in financing lease contracts issued by SAMA under Circular No. 9926/99 dated 16/2/1441 H.
Chapter One: Definitions and General Provisions
Article One: Definitions
1. The terms and phrases used in these regulations and procedures shall have the meanings defined for them in the Finance Lease Law and its Implementing Regulation.
2 For the purpose of applying the provisions of these regulations and procedures, the terms and phrases listed below – wherever they appear in these regulations and procedures – shall have the meanings specified next to each term, unless the context indicates otherwise:
Recovery of Movable Assets: The recovery of movable assets from the lessee in cases where the leasing financing contract between the parties includes the lessor's right to reclaim them.
Request for Delivery of Fixed Assets: The lessor’s request for the delivery of the fixed asset (the property subject to the financing lease contract) from the lessee in cases where the leasing financing contract between the parties includes the lessor's right to reclaim it.
Financial Execution Certificate: A certificate issued by contract registration companies upon request from the lessor, which includes a demand for the lessee to pay a specified amount to the lessor in cases outlined in these regulations and procedures.
Specialized Companies: Companies specialized in the recovery of movable assets, licensed by the Ministry of Justice according to the Enforcement Law. They can be accessed through the Ministry of Justice’s official website.
Parties: The lessor, the lessee, contract registration companies, specialized companies, and the competent judicial authority.
Ministry: The Ministry of Justice.
Authenticated communication: A recorded communication method that can be verified and is retrievable in written or electronic form
Extract of the Enforcement Instrument for the Registered Financing Lease Contract (Extract of the Enforcement Instrument ): A document issued by contract registration companies for the execution on the leased asset (both movable and immovable) according to the provisions of the Enforcement Law and its Implementing Regulation. It includes the Enforcement Extract for the recovery of movable assets, the Enforcement Extract for requesting the delivery of fixed assets, and the Enforcement Extract for the Financial Execution Certificate.
Article Two
It is required for the issuance of the Extract of the Enforcement Instrument that the contract must be registered with contract registration companies.
Article Three
All parties must use electronic means for the process of requesting and issuing the extract of the enforcement instrument.
Chapter Two: Procedures for Requesting and Issuing the Extract of the Enforcement Instrument for the Recovery of Movable Assets
Article Four
The lessor is prohibited from recovering movable assets except through specialized companies.
Article Five
The mechanism for recovering movable assets shall be in accordance with the regulations for the delivery of movable assets to the lessor issued by the Ministry of Justice.
Article Six
The lessor may apply to the contract registration company to issue an extract of the enforcement instrument for the recovery of the movable asset in the following cases:
1- The lessee fails to pay the agreed-upon monthly installments in the financing contract for three consecutive months, or more than five scattered months throughout the contract period, after the lessor has completed the following steps: 1. Notify the lessee through documented communication of the obligation to pay the overdue installments, otherwise, the lessor has the right to recover the movable asset. 2. Submit the request to the contract registration company after fifteen days from the notification to the lessee mentioned in Paragraph (1) above. 2- The contract expires, and the lessee does not either take ownership of the movable asset or return it to the lessor, after the following conditions are met 1. The contract term has ended. 2. The transfer of ownership of the movable asset to the lessee is not possible. Article Seven
Upon receiving the lessor’s request for the issuance of the extract of the enforcement instrument for the recovery of the movable asset, and verifying the lessor’s right to do so, the contract registration company shall carry out the following procedures:
1. Issue the extract of the enforcement instrument, including the contract number and date, place of payment, place of issuance, date of the extract, name of the lessor, name of the lessee, amount due, and current installments.
2. Notify one of the specialized companies – chosen by the lessor – of the lessee’s breach of contract terms and the lessor’s desire to recover the movable asset, providing it with all the details of the movable asset according to the form approved by the contract registration company.
Article Eight
The contract registration company shall provide the Ministry with a monthly statement including all lessors' requests related to issuing the extract of the enforcement instrument for the recovery of the movable asset, along with details of the specialized companies to which these requests were referred.
Article Nine
The lessor must directly notify the lessee of the recovery of the movable asset through documented communication, which must include at a minimum the following:
- The name of the lessor and the entity responsible for collecting overdue amounts.
- Contact number for the relevant department and/or third party.
- Working hours of the relevant department and/or third party.
- The lessor must include the name of the employee, the name of the lessor, and/or the third party if the communication is by phone.
Article Ten
The lessor must provide the lessee with the approved form for the inventory of the movable asset as specified in the regulations for the delivery of movable assets to the lessor issued by the Ministry of Justice, through documented communication regarding the financing lease contract.
Article Eleven
The lessor must not dispose of the movable asset (For example but not limited to: selling the asset, transferring it to another party, or closing the contract) before the expiration of fifteen (15) days from the date of recovery of the asset, with notification to the lessee of the amounts due and the necessary documents for returning the movable asset.
Article Twelve
Except for the cases mentioned in Article Six of these regulations and procedures, the lessor may apply to the competent court to request the termination of the contract and the recovery of the movable asset in financing lease contracts.
Chapter Three: Procedures for Requesting and Issuing the Extract of the Enforcement Instrument for Requesting the Delivery of the Fixed Asset
Article Thirteen
The lessor may apply to the contract registration company to request the issuance of the extract of the enforcement instrument for requesting the delivery of the fixed asset in financing lease contracts in the following cases:
A. The lessee fails to pay the agreed-upon monthly installments in the financing contract for three consecutive months, or more than five scattered months for seven (7) working days or more for each installment from the date it is due for each five (5) years of the contract term, after the lessor has completed the following steps: 1- The lessor must notify the lessee through a formal, documented communication about the requirement to settle overdue payments. If the lessee fails to comply, the lessor may request delivery of the fixed asset. The notice of default must include the following information: (details of the overdue payments, how to rectify and address the default, the period granted to the lessee to rectify the default before initiating repossession procedures of fixed asset, which must be no less than (10) ten working days from the date the lessee receives the notice). This notice should be sent in accordance with the "Notices" clause of the contract. 2- Submission of Request: The request to the Contract Registration Company should be made after failing to reach an agreement with the lessee regarding the settlement of overdue payments, or if the lessee requests early ownership of the asset. B. Contract Termination, If the lessee fails to take ownership of or return the asset to the lessor after the following conditions are met: 1. The contract term has expired. 2. The lessee has not transferred ownership of the asset to themselves within the agreed timeframe with the lessor. 3. Failure to execute a handover report for the asset to the lessor. Article Fourteen
Upon receiving the lessor's request for the issuance of extract of executive bond for the delivery of the fixed asset and verifying the lessor's entitlement, the Contract Registration Company will undertake the following procedures:
- Obtain a confirmation from the lessor regarding their right to request the repossession of the asset from the lessee, ensuring that the lease contract permits this, and attach all supporting documentation for the request.
- For individual real estate financing contracts, notify any housing support programs at the Ministry of Housing (if applicable) of the lessor's intent to repossess the asset from the lessee and provide them with all required information according to the form approved by the Contract Registration Company. This is to assess whether the lessee (individual) meets the support criteria established by the ministry (if applicable).
- If there are no support programs at the Ministry of Housing, or if the lessee (individual) does not meet the support criteria, the Contract Registration Company will issue an executive bond for the repossession of the asset and provide it to the lessor, including the contract number and date, place of payment, place of issuance, date of the bond, lessor's name, lessee’s name, amount due, current payments, and asset ownership details.
Article Fifteen
The lessor may present the executive bond for the repossession of the asset to the relevant authority responsible for eviction and repossession and complete the necessary procedures in accordance with applicable regulations.
Article Sixteen
Except for the cases outlined in Article (Thirteen) of these regulations and procedures, the lessor may directly approach the competent court to issue a judgment for the repossession of the asset. This also includes financing lease contracts concluded prior to the applicability of the Finance Leasing Law.
Chapter Four: Procedures for Requesting and Issuing Extract of Executive Document for Financial Execution Certificate
Article Seventeen
The lessor may submit a request to the Contract Registration Company for issuing an executive document extract for a financial execution certificate in the following cases:
A. Failure of the lessee to pay any of the monthly installments agreed upon in the financing contract. The extract will be issued only for the amounts of the overdue installments. B. Compensation to the lessor for each day of delay if the financing lease contract has ended, and the lessee has delayed returning the movable asset or completing the ownership transfer procedures, after ensuring the following: 1- The contract between the parties must stipulate the lessor's right to compel the lessee to compensate for each day of delay in returning the movable asset after the contract's end. 2- The compensation to the lessor must be calculated based on the daily rent value of the movable asset according to the contract using the following formula: ((Value of the last due rental installment / Number of days in the month when the contract was terminated) × Number of days of delay) = Rental value. C. The cost of retrieving the movable asset in cases where the lessor has the right to retrieve it, after ensuring the following: 1- The retrieval of the movable asset must have been done through one of the cases specified in Article (Six) of these regulations and procedures. 2- The cost must be based on approved invoices issued by Contract Registration Companies and specialized companies. Article Eighteen
The Contract Registration Company, after receiving the lessor’s request to issue extract of an executive document for a financial execution certificate and verifying the lessor’s entitlement, shall issue the executive document extract including the contract number and date, place of payment, place of execution, date of the extract, the lessor’s name, the lessee’s name, the amount due, and the current installments.
Chapter Five: Final Provisions
Article Nineteen
The Contract Registration Company must record and file all requests received from lessors regarding requests for issuing extract of executive document and the outcomes thereof, in an organized manner.
Article Twenty
The lessor must develop internal policies and procedures that align with these regulations and procedures, and that do not conflict with the applicable laws and instructions.
Article Twenty-One
The lessor and Contract Registration Companies must fully comply with these regulations and procedures, in addition to the applicable laws, regulations, and instructions issued by relevant authorities. Neither the lessor nor the Contract Registration Company is exempt from compliance in case of non-adherence.
Article Twenty-Two
These regulations and procedures are subject to updates and amendments as needed.
Article Twenty-Three
These regulations and procedures invalidate the lessor’s right to recover movable assets in financing lease contracts issued by SAMA under Circular No. 99/9926 dated 16/2/1441 H.
Chapter Six: Enforcement
Article Twenty-Four
These regulations and procedures shall be effective from the date of their issuance.
Soft Launch
Your access and use of SAMA Regulatory Rulebook and its content is considered as an acceptance and approval of commitment by you without any limitation or condition to the following:
SAMA Regulatory Rulebook is a platform that aims to assist the regulated entities to access SAMA regulatory content adeptly and efficiently.
SAMA Regulatory Rulebook is still on its development and soft launch stage. SAMA is not liable for its contents and does not warrant or represent that (the Services related to the platform, information or material presented in the platform) is displayed free of any inaccuracies, omissions, or errors (“Faults”). SAMA accepts no liability for any loss, claim or damage resulting from any use of the platform, and any decisions made, or actions taken based on the information contained in or generated by the platform.
SAMA Regulatory Rulebook has no legal effect and it does not aim to amend or revoke any legal provisions. The Rulebook still Contains some documents under review, including translated versions. Therefore, SAMA Regulatory content circulated through SAMA official channels remains in force.
Without prejudice to the terms of use of SAMA website Hereby, you acknowledge that any illegal, unauthorized use and/or any breach of any of these provisions may result in legal actions against you.
Your access and use of SAMA Regulatory Rulebook and its content is considered as an acceptance and approval of commitment by you without any limitation or condition to the following:
SAMA Regulatory Rulebook is a platform that aims to assist the regulated entities to access SAMA regulatory content adeptly and efficiently.
SAMA Regulatory Rulebook is still on its development and soft launch stage. SAMA is not liable for its contents and does not warrant or represent that (the Services related to the platform, information or material presented in the platform) is displayed free of any inaccuracies, omissions, or errors (“Faults”). SAMA accepts no liability for any loss, claim or damage resulting from any use of the platform, and any decisions made, or actions taken based on the information contained in or generated by the platform.
SAMA Regulatory Rulebook has no legal effect and it does not aim to amend or revoke any legal provisions. The Rulebook still Contains some documents under review, including translated versions. Therefore, SAMA Regulatory content circulated through SAMA official channels remains in force.
Without prejudice to the terms of use of SAMA website Hereby, you acknowledge that any illegal, unauthorized use and/or any breach of any of these provisions may result in legal actions against you.