The Real Estate Ownership, Division and Management System is one of the most important legal systems for helping to regulate the real estate market in the Kingdom of Saudi Arabia. This system was implemented to replace a previous system dating back to 2002, and its main objective is to regulate the ownership and management of real estate units in a way that guarantees the rights of all parties dealing with them. The system contains a set of definitions and procedures related to the division of real estate, ownership provisions, and the establishment of owners’ associations, in addition to regulating the management and maintenance of joint real estate.
Basics and Definitions
First, the system sets out a set of definitions that are the basis for understanding all the articles of the system. For example, the system defines a “segregated real estate unit” as a part of the joint property that the owner can dispose of or benefit from independently from the rest of the property. This includes residential units such as apartments, shops, garages, and even any other part that can be owned or benefited from separately. The system also includes a definition of the “common parts” of the property, which are those parts that are used jointly by all owners in the joint property, such as entrances, elevators, parking lots, and storage spaces.
Property Sorting: Legal Framework
The system gives anyone who owns a plot of land with a legal deed the right to build a property on it and divide it into independent units if preferred. Each unit can obtain its own deed, which makes it easier to deal with legally. In addition, the system allows the possibility of re-dividing the property or changing its uses, provided that the owners’ association and all affected parties agree, with specific procedures to ensure that no party is harmed.
The system also indicates the importance of amending the property plans in line with the new divisions or changes in use. It emphasises the need for approvals from the competent authorities when making any amendment.
Ownership Provisions
The system also includes precise provisions regarding the ownership of joint properties. If multiple parties purchase a property jointly, the partnership contract must include detailed information about the partners and their share of ownership, whether paid in cash or through any other method. The system also outlines that the partners in the joint property have the right to divide their common shares so that each of them is entitled to a separate real estate unit, and in the event of disagreement, the matter can be resolved via the judiciary system.
If an owner wishes to sell his real estate unit, he is obligated to submit a statement explaining all the details and specifications of the property, in addition to the rights and obligations of the owner relative to that unit. The buyer must also be notified of any changes to that information before completing the sale. If the owner does not provide all the necessary information, the buyer has the right to terminate the contract within thirty days of signing it, or from the date of his knowledge of the information that was hidden.
Joint Responsibility of Owners
The laws and regulations make all owners of separate real estate units in a combined property partners in the common parts, whether they are individual or multiple owners. This means that the ownership of the side barriers, walls, ceilings, and floors between the units is considered joint ownership. However, it is required that the use of any part does not cause harm to the neighbouring units or to the rest of the owners. The system also determines the share of each owner in the common parts based on the area of his real estate unit compared to the total area of the joint property.
Management of Joint Real Estate
One of the most important points in the system is related to the management of joint real estate. If there are three or more owners in a joint property, it becomes necessary to form an "owners’ association". The association is responsible for managing the property, maintaining it, and organising its daily affairs. The association has an independent legal personality and a separate financial status, which allows it to exercise its role effectively and independently of the unit owners.
This association is registered with the General Authority for Real Estate, and operates according to a basic system that ensures the proper use of the property and its proper management. The association's bylaws include strict rules regarding the management of common areas, and for determining owners' fees for maintenance and management.
Owners' Rights and Obligations
Although the owners' association plays a fundamental role in managing the property, the owners' rights to dispose of their real estate units remain preserved as long as they do not harm other owners. The system clarifies that the association has no authority to restrict the owners' rights to benefit from their real estate units, but it obliges the owners to adhere to the general rules governing the common areas.
Maintenance and Management
Maintenance is a pivotal issue in managing the common areas. The system clarifies that maintenance includes all the work necessary to maintain the common area around the unit and all the common areas of the property as a whole. The owners' association is responsible for organising this work, and financial contributions are determined from the owners to cover the maintenance costs.
The system also allows the owners of the real estate units to choose a manager or a group of people to manage the property, whether they are individuals or legal entities. The manager is responsible for supervising maintenance, managing the property, and ensuring that all owners adhere to the general rules.
Repossession and Compensation
In cases of repossessing the property for public interest purposes, the system includes clear mechanisms for compensating owners. If a joint property is repossessed, each owner is compensated based on the percentage he owns of the joint property. If the repossessed portion is an individual real estate unit, the owner is compensated based on its value.
The Real Estate Ownership, Division and Management System is an integrated legal framework that aims to regulate the relationship between owners of real estate units, and determine their rights and obligations towards the shared property. The system contributes to regulating the real estate market, and guarantees the rights of all parties dealing in this field. In addition, it enhances transparency and shared responsibility among owners, which contributes to creating a more stable and sustainable real estate environment.
