Transfer of The Real Estate Financing Debts
| No: 391000028242 | Date(g): 28/11/2017 | Date(h): 10/3/1439 |
Translated Document
Based on Article 2 of the Real Estate Finance Law issued by Royal Decree No. (M/50) dated 13/08/1433H. which authorizes SAMA to regulate the real estate finance sector, including the issuance of standards and procedures related to real estate financing, further to the circular No. 391000000353 dated 01/01/1439H. Regarding Variable-Cost Real Estate Financing Products for Individuals.
Based on the role of SAMA in protecting the rights of customers of financial institutions under its supervision, and due to the importance of regulating the transfer of customers' debts who meet the conditions of the above circular, it is necessary to adhere to the following:
| First: | The financing entity (debt seller) must fill out the form for transferring real estate debt (attached) within seven working days of receiving the request from the customer. It should complete all the necessary information while adhering to the accelerate the payment standards mentioned in Article 84 of the Implementing Regulation of the Finance Companies Control Law issued by the decision of His Excellency the Governor No. 2/MFC dated 14/04/1434H. which regulates the accelerated payment process, with the necessity of notifying the customer immediately upon issuing the debt transfer document, provided that the offer period specified in the form is not less than ten working days." |
| Second: | After the financing entity (willing to purchase the debt) receives the debt transfer form, it commits to the following: |
| Grant credit equivalent to(100%) of the value of the offer specified in the form. | |
| • Obtain a written acknowledgment from the customer that includes all obligations, if any, such as, but not limited to, (property safety, appraisal fees, property guarantee, etc.). | |
| Third: | Upon the approval of the financing entity (willing to purchase the debt) and completion of the requirements, a cheque in the amount of the debt is issued and the form is returned to the financing entity (the debt seller) to complete the ownership transfer process within a period not exceeding seven working days from the date of receiving the debt transfer form. |
| Fourth: | The financing entity (the debt seller) must, after receiving the form and the bank cheque, commit to the following: |
| Initiate the process of transferring the property ownership to the financing party (the debt buyer) from the date of receiving the bank cheque. | |
| Update the customer's credit record and issue a clearance letter for the customer. | |
| Fifth: | Taking into account the aforementioned points, the financing entity (willing to purchase the debt) commits to the following provisions, stated in Article 10 of the Implementing Regulation of the Real Estate Finance Law, issued by the decision of His Excellency the Minister of Finance No. 1229 dated 10/04/1434H. |
It has been observed that some real estate financiers, when purchasing real estate financing debt from another financier, provide the customer with an excess cash amount, resulting in an increase in the amount of the new financing.
In order to ensure SAMA's commitment to protecting customers and ensuring that financing entities comply with the relevant regulations and instructions, SAMA would like to emphasize the following:
- Compliance with the provisions of Article (11) of the Implementing Regulation of the Real Estate Finance Law, as well as the subsequent circulars issued by SAMA 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 dwelling for the citizen.
- Compliance with the accelerate the payment standards outlined in Article 84 of the Implementing Regulation of the Finance Companies Control Law, which regulate the process of accelerated payment.
- Compliance with paragraph (Second) of the above-mentioned circular, which states that "Grant credit equivalent to(100%) of the value of the offer specified in the 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 SAMA will take all legal measures against real estate financiers who do not comply with the provisions of this circular.