The real estate sector in the Kingdom of Saudi Arabia is one of the key and vital sectors contributing to the national economy under the Kingdom's Vision 2030which aims to achieve comprehensive and sustainable development across various fields, including real estate. As a major economic driver in the kingdom, the Kingdom witnesses notable growth in the demand for real estate projects, whether residential, commercial, or industrial, thereby reinforcing its role as a robust economic hub in the region. In this context, the Kingdom has introduced several initiatives and policies to develop and regulate this sector. Real estate brokerage is among the most prominent activities receiving special attention, whereas Real estate brokers facilitate the buying, selling, and leasing of properties, thus enhancing market dynamics and ensuring a transparent and secure investment environment.

The Kingdom regulated and developed the real estate sector by issuing laws and regulations governing the real estate brokers activities. These measures aim to build trust among transacting parties and make justice. By implementing these procedures, the Kingdom seeks to attract more local and international investments into the real estate market, encourage innovation in providing real estate services, and reflect its commitment to regulate this sector and provide investment environment to ensure its sustainability and bolster its position in the global economy. As a response to the above, the Real Estate Projects Team at Dr. Fahad Alrefaei & Partners Consulting & Law Firm is dedicated to provide important legal information about real estate brokerage in Saudi Arabia, in accordance with the Real Estate Brokerage Law.

Nature of Real Estate Brokerage Activity

• Real estate brokerage in the Kingdom of Saudi Arabia is an important activity that aims to mediate the completion of real estate transactions among its parties.
• Real estate brokerage in Saudi Arabia is carried out in consideration of getting a commission.
• Brokerage activities shall include electronic mediation through technological tools such as websites and social media platforms.

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Conditions for Practicing Real Estate Brokerage

• Real estate brokerage in Saudi Arabia for nature person and legal entity shall only be practiced upon obtaining a license from the General Authority for Real Estate.
• A natural person seeking to practice brokerage shall be at least 18 years old, be of full legal capacity, have no prior convictions for crimes involving dishonor or breach of trust unless rehabilitation has been granted, successfully complete the qualifying program for the activity and pay the applicable licensing fees, except for licenses related to real estate marketing and advertising.
• A legal entity seeking to practice real estate brokerage shall possess a valid commercial registration that includes the desired activities, appoint a qualified and responsible manager who have no prior convictions for crimes involving dishonor or breach of trust unless rehabilitation has been granted, pay the applicable licensing fees, except for licenses related to real estate marketing and advertising.

Procedures for Obtaining a Real Estate Brokerage License

• Applications for a brokerage license shall be submitted to the General Authority for Real Estate, accompanied by (National ID for individuals or commercial registration for entities, contact details and national address), For entities, the appointment of a responsible manager shall also be specified.
• The application shall be reviewed within seven business days from the date of submission, as the Authority may request additional documents or information if deemed necessary, applicants shall provide the required documents within seven business days of notification, otherwise, the application shall be deemed rejected.
• In case of rejection, the Authority shall provide reasons for the decision and refund the licensing fees to the applicant.

Duration of the Real Estate Brokerage License

• The license shall be valid for one year, and it may be renewed for up to five years upon the broker's application submitted to the Authority.
• The renewal application is submitted at least sixty days before expiration and all applicable renewal fees are paid.

Obligations of the Real Estate Broker During the License Period

• The Real Estate Broker During the License Period in the kingdom of Saudi Arabia shall:
• Personally conduct brokerage activities if a nature person or through an authorized manager or employee if a legal entity.
• Make no actions that harm clients or violate the provisions of the Real Estate Brokerage Law.
• Notify the General Authority for Real Estate of any modifications or changes related to brokerage activities.
• Maintain confidentiality of transaction details.
• Exercise due diligence to verify the accuracy of information provided by property or usufruct owners.
• Disclose property details as provided by owners without misleading or false information regarding the property.
• Include their name and license number in advertisements and publications related to properties, ensuring transparency and credibility and providing services with quality.
• Register all brokerage agreements and real estate transactions in the related electronic platform.
• Security Deposit, a payment paid by the lessee in good faith to compensate the property or usufruct owner for any damage covered under the lessee’s liability. This deposit shall be delivered to the General Authority for Real Estate or its authorized representative, to be held in safekeeping until the property is returned without damage. Any remaining amount, after deducting the cost of damages, shall be refunded to the lessee.
• Collect payments from clients only to the extent necessary to complete transactions and use such amounts only for their intended purposes.
• Facilitate the work of inspectors by granting access to the premises and providing requested documents or information related to the Real Estate Brokerage Law.

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Regulations and Data Required for Drafting the Real Estate Brokerage Agreement by the Real Estate Broker

• A brokerage agreement is an agreement between the real estate broker and the beneficiary party to facilitate a real estate transaction or provide a related service, as the contract shall be in written form, and the broker is required to submit a copy of the agreement to the General Authority for Real Estate.
• The brokerage agreement shall have a specified duration, If no duration is agreed upon in the agreement, it shall be deemed valid for ninety days from the date of signing, When signing a brokerage agreement with the property or usufruct owner, the broker shall obtain a copy of proof of property or usufruct ownership and any additional information or documentation required by the Authority.
• When a brokerage agreement is signed with the property or usufruct owner, the following shall be included:
• Details of the agreement parties.
• Details of the agent and power of attorney number, if applicable.
• Property registration number or title deed number and date.
• Property description.
• The brokerage commission rate or amount.
• Agreement duration.
• Any existing disputes related to the property - if applicable.
• Mortgages or restrictions affecting the property's usability if applicable.
• Rights and obligations tied to the property not documented in its deed, if applicable
• Services related to the property if applicable.
• Information that may affect the property’s value if applicable.
  
  
• When a brokerage agreement is signed with the buyer or lessee, the following shall be included:
• Details of the agreement parties.
• Details of the agent and power of attorney number, if applicable.
• The brokerage commission rate or amount.
• Agreement duration.
• Subject of the agreement.
• When a brokerage agreement is signed between the brokers, the following shall be included:
• Details of the agreement parties.
• Disclosure of related brokerage agreements.
• The rate or amount of the brokerage commission agreed upon in the primary brokerage agreement.
• Agreement duration, not exceeding the duration of the primary agreement.
• Subject of the agreement.

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Real Estate Broker Commission

• The real estate broker’s commission is a fee earned by the broker for providing real estate brokerage services. The obligation to pay this commission lies with the party contracting with the broker in the brokerage agreement.
• The broker’s commission rate is set at 2.5% of the transaction value for sales or the first year’s rent for lease agreements; unless otherwise agreed upon in writing by the parties to the brokerage agreement.
• If a broker enters into brokerage agreements with multiple parties in the same real estate transaction, the total commission earned by the broker shall not exceed 2.5% of the transaction value.
• The broker is entitled to their commission upon successfully completing the real estate transaction as stipulated in the brokerage agreement, either during the agreement period or within a maximum of two months after the agreement expires, provided that the broker shall prove their involvement in facilitating the transaction. If the transaction is not completed, the seller or lessor retains their right to avoid commission payments.

Termination or Expiration of Real Estate Brokerage License

• Licensed brokers in Saudi Arabia may request the cancellation of their brokerage license, Whereas the General Real Estate Authority shall decide on such requests within a maximum of three business days.
• The license cancellation shall not be decided if any violations of the laws or regulations are discovered. The process is paused until a final decision regarding the violation is issued.
• The brokerage license automatically terminates under the following circumstances:
• Non-renewal of the license upon expiration.
• Death of the individuals or dissolution of a corporate entity.
• License cancellation requested by the license holder.
• Failure to meet any of the required licensing conditions or terms.
• A final decision is issued to cancel the license.

In conclusion, At Dr. Fahad Alrefaei & Partners Consulting & Law Firm, We understand the importance of clear and comprehensive legal guidance in real estate brokerage activities in Saudi Arabia to ensure compliance with local laws and regulations. Providing comprehensive legal consultations in this domain not only safeguards the rights of all involved parties but also promotes transparency and fairness within the real estate market. By committing to these principles, the firm aims to support its clients in achieving legal and commercial balance, helping them thrive in a well-regulated and equitable real estate environment.

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Legal Experts at Your Service!

Our legal team at Dr. Fahad Alrefaei & Partners Consulting & Law Firm possesses extensive experience in Saudi real estate regulations and a deep understanding of the local market's requirements. The legal services we provide for real estate brokerage activities include the following:

Obtaining Necessary Licenses for Practicing Real Estate Brokerage:

• Assisting brokers in obtaining the necessary licenses from the General Real Estate Authority.
• Following up on procedures and ensuring all conditions are met.

Preparing Real Estate Agreements and Transactions:

• Drafting sale, purchase, lease agreements, power of attorney, and other contracts related to real estate activities.
• Reviewing contracts to ensure their legal accuracy and validity.
• Protecting the rights of all parties involved in the contract.

Legal Consultation on Laws and Regulations:

• Providing legal consultation on real estate brokerage law and other related laws.
• Answering brokers' inquiries on various legal issues.
• Assisting in interpreting and applying laws and regulations to specific cases.

Resolution of Real Estate Disputes and Conflicts:

• Representing real estate brokers in disputes and conflicts with clients or other parties.
• Resorting to appropriate legal means to resolve disputes.
• Facilitating amicable settlements to resolve conflicts.

Legal Training and Awareness:

• Organizing workshops and training sessions for brokers on real estate brokerage regulations and laws.
• Enhancing legal awareness among brokers to improve their performance and minimize legal mistakes.

Why Choose Our Specialized Legal Services in Real Estate Brokerage?

• Protect Your Interests: Our services help to protect your legal interests and secure your rights in all real estate transactions.
• Avoid Legal Issues: Our specialized legal team can assist in avoiding legal issues that may affect your business.
• Ensure Compliance with Laws and Regulations: We ensure that your real estate activities comply with applicable laws and regulations.
• Resolve Disputes Effectively: In the event of any dispute, our specialized legal team shall represent you efficiently and resolve the dispute promptly.

For more information about our legal services, feel free to contact Dr. Fahad Alrefaei & Partners Consulting & Law Firm via the following communication channels:

• Phone: 920012753
• Email: [email protected]

Through: Seeking a Legal Consultation