Transfer of The Real Estate Finance Debts
Translated Document
Effective from Apr 19 2025 - Nov 27 2017
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Based on Article 2 of the Real Estate Financing Law issued by Royal Decree No. (M/50) dated 13/08/1433 H, which authorizes the Central Bank to regulate the real estate financing sector, including issuing standards and procedures related to real estate financing, and following up on Circular No. 391000000353 dated 01/01/1439 H concerning variable-cost real estate financing products for individuals.
In line with the Central Bank's role in protecting the rights of clients of financial institutions under its supervision, and given the importance of regulating the transfer of client liabilities for those who meet the conditions of the aforementioned circular, the following must be adhered to:
| First: | The financing entity (the seller of the liability) must complete the form for the transfer of real estate financing liabilities (attached) within seven working days of receiving the client's request. All required information must be provided, and the entity must adhere to the early repayment standards outlined in Article 84 of the Executive Regulation of the Real Estate Financing Companies Control Law, issued by the decision of the Governor No. 2/M Sh T dated 14/04/1434 H, which regulates the early repayment process. Additionally, the client must be notified immediately upon issuance of the liability transfer document, provided that the notice period specified in the form is no less than ten working days. | ||
| Second: | Upon receiving the liability transfer form, the financing entity (interested in purchasing the liability) must adhere to the following: | ||
| Grant credit equivalent to( 100%) of the value of the offer specified in the form. | |||
| Obtain a written acknowledgment from the client that includes all obligations, if any, such as but not limited to the condition of (the property, appraisal fees, property guarantees, etc). | |||
| Third: | Upon the financing entity (interested in purchasing the liability) approving and completing the requirements, a bank check for the amount of the liability must be issued and the form returned to the financing entity (seller of the liability) to complete the transfer of ownership process. This must be done within seven working days from the date the form is received. | ||
| Fourth: | Upon receiving the form and the bank check, the financing entity (seller of the liability) must adhere to the following: | ||
| Initiate the process of transferring the property ownership to the financing entity (buyer of the liability) from the date of receiving the bank check. | |||
| Update the client's credit record and issue a clearance letter to the client. | |||
| Fifth: | Taking into account the aforementioned, the financing entity (wishing to purchase the debt) must comply with the provisions stated in Article 10 of the executive regulations of the Real Estate Finance Law, issued by the decision of His Excellency the Minister of Finance No. 1229, dated 10/04/1434 AH. | ||
Additional Provisions According to Circular No. (391000086876) dated 09/08/1439H.
It has been observed that some real estate financiers, when purchasing real estate financing debt from another financier, provide the client with an excess cash amount, resulting in an increase in the amount of the new financing.
In order to ensure the Central Bank's commitment to protecting customers and ensuring that financing entities comply with the relevant regulations and instructions, the Central Bank would like to emphasize the following:
- Compliance with the provisions of Article (12) of the executive regulations of the Real Estate Finance Law, as well as the subsequent circulars issued by the Central Bank regarding it, which set the maximum limit for granting credit in real estate financing contracts, in any form of financing, at 90% of the value of the first home for the citizen.
- Compliance with the repayment standards outlined in Article 84 of the executive regulations of the Finance Companies Control Law, which regulate the process of accelerated repayment.
- Compliance with paragraph (Second) of the above-mentioned circular, which states that "credit should be granted at an amount equivalent to (100%) of the value of the offer mentioned in the debt transfer form.
- Compliance with the purchase of real estate financing debt at an amount equivalent to the value of the purchase offer only. For your information and adherence accordingly. Please note that the Central Bank will take all legal measures against real estate financiers who do not comply with the provisions of this circular.