The Ministry of Housing (Ministry) based on the powers invested with it, issued the implementing regulations for the ownership, sorting and management of real estate units, after the submission of the General Authority for Real Estate in Saudi Arabia, a draft of these regulations to the Ministry. The Ministry approved them on 14/9/2020G corresponding to 22/10/1441AH. The implementing regulations’ list included several provisions regarding the sorting of properties and the ownership of those units. The implementation regulations also included special provisions with regard to the Association of Owners and the Association of Real Estate Complexes as the regulation dealt with provisions for the management and maintenance of real estate units. Finally, the General Authority for Real Estate in Saudi Arabia (Authority) is the authority which is assigned to take decisions and actions necessary to implement the provisions of these implementing regulations.

Terms and conditions for sorting the joint real estate in the real estate complex:

• The joint-property is sorted according to the national identity of the joint-real estate and according to the approval of the Authority.
• The sorting will be carried out according to the serial number placed within the forms approved by the Authority.

Note: In the event of a dispute over joint real estate which is subject to sorting with another party, the dispute does not hinder the sorting process unless the competent court orders that the sorting should be stopped until the dispute is decided.

The required documents for sorting or re-sorting the real estate in a complex:

• Legal title deed of real estate property.
• joint property data and the date of relevant licenses.
• The survey report was authorized by the engineering office and approved by the Authority.
• It is also a must to produce the approval of that report from the Association of Owners and the Association of Real Estate Complexes.

Note: If the property is mortgaged, proof of the mortgagee’s approval must be provided to complete the screening process or re-sorting.

• In the event that, the property is sorted, it is mandatory to provide proof which proves the acceptance of the owner of property (which is sorted previously) and that while re-sorting the property again and the sorting process led to change in the area of the sorted property with appropriate change in area of the percentage of joint-parts between the sorted-property and the other properties or changing the percentage of common land area of the sorted-property.
• Requests for sorting or re-sorting must be submitted to the Authority for its consideration. If the request is approved, then it will issue a document including all data related to the property and the type of operation specifying whether it is a sorting or re-sorting of property, joint-property, or joint-parts of properties in the real estate complex.
• The approval will be processed through coordination between the Chairman of the Authority’s Board of Directors and the Minister of Justice concerning the acceptance of the data included in the documents related to the screening or recount operations.

Ownership of separate and co-owned properties in the real estate complex:

• The owner of the property must disclose all the data related to the property, its annexes and the specifications of that property.
• The owner must also disclose all the rights and obligations of the property he/she owns, through a prepared statement of declaration and get it approved by the Authority.
• The owner’s disclosure must be clear and sufficient regarding the annexes and contents of the property.
• The disclosure is an essential condition that the owner of the property is obligated by while intending to sell his/her property, so that the sale process becomes legal according to the articles of the implementing regulations.

Note: The buyer has the right to terminate the sale contract whenever it is found that the seller has infringed the condition of disclosure provided in the implementation regulations.

The data that must be mentioned in the disclosure statement which is approved by the Authority is as follows:

• The title of the real estate, its area, its plan, its annexes, its contents, whether fixed or transferred.
• The percentage of common parts of the property in the real estate complex, the real estate share thereof and the restrictions imposed on the use of those parts.
• The mortgage contract if the property is mortgaged, if existed.
• The defects of the property, if any.
• Any other data, if requested.

Note: The purpose disclosing the aforementioned data is to make the buyer or tenant aware of all matters related to the property or joint-property sold or leased.

For clarification, the below form a part of common parts:

• structural elements that pass through real estate.
• The infrastructure used to provide public services is located in joint real estate.
• mechanical, electrical or electro mechanical systems that are located and are used in a separate property or a joint property.

Conditions for registration of the Association of Owners and the Association of Real Estate Complexes and the importance of the Articles of Association

• Owners of joint-property in a real estate complex have the right to establish a private association for the real estate complex to manage the affairs of the real estate complex and that association will be responsible for its debts and obligations to others even after its expiry for any reason.
• The association will acquire legal personality only after its registration and not before its registration.
• The association must be subject to the provisions of the statute of establishing the association as this is a prerequisite for the registration of the association.

The registration process of the Association of Owners and the Association of Real Estate Complexes:

• One among the property owners should submit a complete registration application to the Authority. After completion of registration, the owner who completed the registration must invite the members of the general assembly to hold a meeting within 5 days from the date of registration of the association.
• Upon completion of the registration process, the association will be registered directly in the register of the Authority.

Note: The registration application must include data from the owners or their representatives, joint property and property data, the Articles of the Association of the General Assembly and the details of its members at the time of registration.

The statute of establishing Articles of Association must include all provisions that guarantee the proper functioning and management of the complex weather:

• Administratively, by setting controls for decision-making after meetings of the general assembly, setting its regular quorum and appointing its director.
• Financially, by setting the fiscal year, budgeting, and monitoring expenses.
• Invest by setting controls and foundations for investment in the real estate complex.
• Organization and planning, by setting the rules and provisions for participation in the complex, specifying the properties of the complex, (whether sorted or re-sorted), their number and their percentage in the complex, the joint identification and the common parts and their percentage, determining the number of real estate in the complex, and other organizational matters.
• Services by setting provisions for the services provided by the real estate complex.
• Consequently, the Articles of Association lays down the functioning procedure of management and organization of foundations, standards and provisions which the complex should adhere to specifying that the functioning procedure does not violate the law or the regulations.

Powers conferred with the Real Estate Complex Association and the restrictions imposed on it:

• The Real Estate Complex Association makes all decisions that would manage and organize the real estate complex covering features like administration, finance, investment, planning and making decisions related to providing services to the real estate complex.
• Additionally, the Real Estate Complex Association does not restrict the rights and obligations of any of the owners of the property who are members of the Real Estate Association pursuant to the requirements of the law, the implementing regulations and the Articles of Association.

The responsibilities, the powers conferred to and duties of the director of the Real Estate Complex Association and the Authority’s approval the director’s decisions:

• The director of the Association of Real Estate Complex in his capacity as director is responsible for making all decisions regarding the management of the real estate complex and for this he is conferred with the power to authorize others to undertake the work of the administration.
• In addition to the above, when the director makes decisions on behalf of the Association of Real Estate Complexes, the Association of Real Estate Complexes will be committed and responsible for the consequences of all actions and decisions that the director took on its behalf.
• Regulating the duties and powers conferred on the director in relation to decisions he makes on behalf of the Association of Real Estate Complex, the liability is placed on the director for his decisions that cause harm to others or violate the rules, regulations and the statute of Articles of Association. The director will be obligated to compensate the Association of Real Estate Complex for the damages resulting from his wrong and harmful decisions.

The duties of director of the association of real estate complex include:

• Provide all materials, services and work to manage and maintain the real estate complex.
• Collecting the owners’ contributions.
• Get an approved budget.
• Make all financial procedures and decisions for the real estate complex.
• Coordinating with the president of the general assembly to invite their meetings.
• Represent the Association of Owners and the Association of Real Estate Complexes with government, private agencies or to others.

The Authority approves all decisions that the director may make concerning the administration and organization of the property complex and these decisions must be made according to the following conditions and restrictions:

• The director has to make his decisions with no direct or indirect interest for him or his relatives up to the fourth degree.
• The director’s decisions must not include any conflict of interest.
• The director’s decisions must be within the limits of the powers conferred upon him by the law, the executive regulation and Articles of Association.

Note: The Authority may initiate all actions and decisions in the event of a default by the director regarding the performance of his duties.

Clarifications on the nature, powers, roles and functions of the General Assembly and its relationship with the Commission:

• The General Assembly is the official representative of both the Association of Owners and the Real Estate Complex Association, it includes members from both associations, and may include one or more representatives of joint-property owners, and in the event that there is no joint-property in the real estate complex for not yet established, then, the official representative of the owners who does not own properties yet.
• The General Assembly is concerned with taking actions, procedures and decisions through its various meetings, including several decisions, setting the Articles of Association, electing its president and defining the actions and expenses required for the establishment of the General Assembly.
• The General Assembly shall make the necessary procedures or decisions regarding laying the foundations, frameworks, standards and provisions to which the real estate complex will be subject to, because of its competency regarding setting the basic statute of the complex.
• In addition to the above, in the event of the inability or failure of the General Assembly to convene, the Authority shall take those relevant decisions.

Auditor appointments, appointment restrictions and auditor functions in the real estate complex:

• Both the owners association and the real estate complex’s association must appoint an auditor, if the real estate complex:
• Includes 100 real estate units or more.
• The assets of the owner’s association and the real estate complex’s association have a value exceeding one million riyals.

The Auditor’s restrictions:

• The auditor must not combine his work as an auditor and membership of the general assembly or any other business.
• The auditor is not permitted to be a partner of one of the members of the general assembly or an employee of his or his relatives up to the fourth degree.

The duties of the Auditor:

• Examining the books and records of the association.
• Requesting data and clarifications about those books, so that he can prepare the annual reports according to the auditing standards, and present it to the General Assembly.

Auditor’s obligations and responsibilities and approval of the Auditor’s decisions:

• The Auditor’s obligations:
• Auditors should not disclose the secrets of their association to others, or disclose the secrets of their work to owners who are not members of the General Assembly.
• The Auditor’s responsibilities:
• The auditor is responsible before the General Assembly for the damage caused to the General Assembly, as a result of his failure or neglect to work.

Approval of the General Assembly for the Director’s report and financial statements:

The General Assembly’s approval of the Director’s report and financial statements is valid of approval is granted before the review of the auditor’s report. If the approval is granted before the review of the auditor’s report, the approval decision is considered invalid.

The Association of Owners and the Association of Real Estate Complex’s acceptance of donations, gifts, wills and endowments:

The Association of Owners and the Association of Real Estate Complexes may accept donations, gifts, bequests and endowments through certain conditions and restrictions, as follows:

• Acceptance should not be incompatible with or contradict the provisions of the rules, implementing regulations and articles of the statute of the association.
• Acceptance must not be conditional on achieving a specific interest.
• The acceptance must have no specific illegal consequences for its purpose, like providing financial advantages in kind to the director or any of his assistants or his subordinates.

Note: It is possible to dispose of these donations, gifts, bequests and endowments according to the rules and procedures to which the association is subject and those donations, wills and endowments must be recorded in the register prepared for that. That record must contain information related to the providers of those donations, wills and endowments and their ways of spending.

Rights and obligations of the Association of Owners and the Association of Real Estate Complexes:

The association has the right to:

• Investing its money in various fields.
• Create a form of cash reserve to cover costs that exceed its approved budget, but it is conditional on the agreement between the owners to form the amount of the reserve.
• Opening a bank account for it, to deposit its money in it, in any bank in the Kingdom.

The association is obliged to:

• Keep the minutes of its meetings.
• Book their accounts showing the amounts due, whether on the owners or others in a special record to accounting books.
• Write all the addresses, correspondences, notices, data and reports in the Arabic language and you may choose another language if necessary.

Managing, maintaining, and improving the common parts of the real estate complex in order to preserve its safety:

• Owners of joint-property, excluding others, are obligated to pay the costs of maintenance and improvements to the common parts of the real estate complex.
• Additionally, any of owner of the sorted property has the option to pay additional maintenance costs and improvements to the joint-parts at his own expense, knowing that the additional costs that the owner of the sorted property paid at his expense, is not a legal reason to gain the ownership of the separated property, because the acquisition of ownership of the separated property has its provisions and rules laid down by the law, the implementing regulations and statutes’ articles of the association.

Maintenance work, improvements and conditions, and provisions for compensation to the owner or owner of the property for damage to the property that was empty and not resident at the time of carrying out this work:

• When the association makes a decision that includes conducting maintenance and improvements to the common parts of the real estate complex in order to preserve its safety and good use of its services, it must do the following:
• It must notify, the owner of the sorted property about the type of those operations and the specific period of completion before starting work.
• These actions should lead to the restoration of the situation in the property to it was upon completion of maintenance and improvements, and during the specified period in which the property owner was notified in advance of the start.
• The owner of the property should not bear any additional costs arising from that work, except to the extent that, he is the cause of the damage to the property.

The property owner or occupant must be compensated for the damage to the property during the implementation of maintenance and improvements. The compensation must be compatible with the fare of the same for that property, and the owner who was not a resident of his property must be compensated for the additional costs incurred during the stay in an alternative location, which means that the compensation will also include the additional costs that were paid after moving and staying elsewhere.